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GM shouldn’t forget the (recent) past

By Claes Bell · Bankrate.com
Saturday, August 21, 2010
Posted: 10 am ET

This weekend in southeast Michigan, car guys and gals from all over the country will gather to celebrate American cars at the Woodward Dream Cruise. Over a million owners and admirers of American classics, tricked-out modern cars and just about everything in between will be cruising 13 miles through eight Michigan communities on their way to Detroit, just as they have every year since the first Cruise in 1995.

A GM-sponsored cruise during the 2008 Woodward Dream Cruise

A GM-sponsored cruise during the 2008 Woodward Dream Cruise

For American car aficionados there's a lot to celebrate this year. The formerly anemic American car industry is showing signs of good health, Ford is turning a profit, General Motors may be able to pay back the government soon and Chrysler is showing signs of life after its sale to Fiat.

In fact, GM, is setting up tents at the Dream Cruise after skipping the event last year. And it's announced it will buy advertising space in next year's Superbowl. I don't mean to rain on the (car) parade going on in Detroit these days, but let's just hope that as the General gets more comfortable, it won't again develop the kind of complacency that created a generation of cars that were so bad they destroyed one of the biggest corporations in the world.

Instead of letting its sponsorship budget drift back up to $250 million, it should sink that money into covering its existing obligations, engineering better products and modernizing its manufacturing. Why should we care? Well, GM still owes us taxpayers nearly $50 billion; when people say "sponsored by General Motors," they really mean "sponsored by U.S. taxpayers."

And then there's the effect GM has on the American economy when it periodically announces massive layoffs every time there's an economic downturn. Oh, and you can't forget the millions of current and future owners of GM products, whose cars will lose value if GM makes terrible products again or falls back into bankruptcy.

They're doing well now, but I'll be more convinced this American automotive renaissance is real when the industry can be successful when gas isn't relatively cheap, as it is now, or when unions aren't making millions of dollars worth of concessions, or the government isn't getting them out of billions of dollars worth of debt through bankruptcy.

I'm all for people getting together to have some fun, especially with the nation in such a foul mood from consecutive years of economic trouble and high unemployment. But GM and its American brethren can't afford to romanticize the past and forget that just a year ago they were fighting for their survival. And only 9 years ago, Jerry Flint, probably the greatest auto writer in history, was uttering these words before a gathering of GM engineers and technicians:

"GM executives don't seem to understand that the art of the auto business is building desirable vehicles, not killing models and closing plants," he declared. "You are badly led, with an organization that doesn't work."

That's a bit of history GM would do well to remember, too.

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2 Comments
Meagan
August 21, 2010 at 1:04 pm

You make a good point, but a big part of purchasing decisions come from brand recognition and perceived stability. By sponsoring events and buying ads, consumers see GM as having moved past the bailout days. As long as GM continues to pay back the money the gov't loaned them, I think spending money on sponsorships is OK.