General Motors: A case study in terrible decision making.

Standard and Poors has gone on record stating that bankruptcy is a REAL POSSIBILTY for General Motors. Kirk Kerkorian, who has personally lost an estimated $500MM in GM stock value sold 12 million of his 55 million shares, cutting his ownership down to 7.8%. And with GM's market cap down to 10.77B, there is the serious possibility that GM may be kicked off the DOW.

So, the real question is What the hell happened? Was it pension obligations? Employee health care? Union greed? Nope: The real problem is that GM can't find it's ass with both hands when it comes to building a quality automobile.

Let's look at the most common cars on the road:
1) Small commuter cars
2) Larger commuter cars
3) Luxury cars
4) Hybrids

Given $3+ gas, I'm going to ignore trucks and SUV's, as they are rapidly becoming a weak force in the market.

Small Commuter Cars
Best in class: Honda Civic/Toyota Corolla
Emphasis of best in class: Reliability and good gas milage
GM's entries: Cobalt/Aveo
GM's emphasis: CHEAP, available bells and whistles.

Larger Commuter Cars
Best in class: Honda Accord/Toyota Camry
Emphasis of best in class: Build quality, reliability, conservative styling
GM's entry: Chevy Malibu (Malibu MAXX!), Pontiac G6 (The first ever!)
GM's emphasis: Lots of available bells and whistles.

Luxury Cars
Best in class: Lexus.
Emphasis of best in class: Build quality, reliability
GM's entry: Cadillac
GM's emphasis: "Aggressive" styling, bells and whistles

Hybrids
Best in class: Toyota Prius
Emphasis of best in class: Decent gas milage, first to market
GM's entry: "We have a hybrid SUV that you should look at!"
GM's emphasis: "Hybrid-what now? No one wants that."

GM has been losing market share for YEARS because their designs don't meet the criteria of the buying public. The buying public isn't looking for lots of bells in whistles - quite the opposite, in fact. Sure, you can buy a "fancy" Toyota Camry, but I'd be willing to bet that 75% of Camry's on the road are identical in almost every way except color.

GM can't match the build quality of a Toyota or Honda. In my opinion, there is only one other route available to them: Cheap price.

If the GM Cobalt cost $8,500 and the only option was exterior color, how many $18,000 Civics do you think would be on the road? If the Malibu cost $11,000 - would you still buy a $22,000 Accord?