It’s time for GM shake up its business model. Over the past few months the headlines have been filled with news about the big US automakers, their desperate situation and their inability to turn a profit. This is quite laughable for those of us on the green side of the spectrum, given that the US automakers have fought for 20 years against increased fuel efficiency standards and now no one wants to buy their bloated cars. Another great example of bullheadedness is GM’s missed opportunity to leap ahead of the competition with the EV1. GM has dragged its heels with every opportunity to change its business model and actually produce something consumers want to buy. It’s time for this behemoth to stop thinking about itself merely as a car manufacturer and start thinking of itself as a transportation company with all the flexibility of product and service offerings that implies.
Increasing demand for fuel efficient vehicles was predictable to anyone with a hint of an understanding about peak oil. Given that cars require oil to drive, it seems like basic good business practice to consider that the supply of this material is limited, and that is likely to have a serious impact on prices. The problems with the GM business model go beyond a lack of predictive ability. GM has been stuck all these years with the same old model: produce cars cheaply and convince people they want them through heavy advertising.
Well, the jig is up. The wires are hot with yesterday’s news that GM CEO Rick Wagoner resigned effective immediately at the request of the Obama administration. In Wagoner’s not-so-stellar eight year in the top seat, GM moved from 34% market share in the US down to 22%. In 2007 the company recorded $38.7 billion loss.
The president’s startling move comes along with an aid package that will get GM through the next 60 days to give the company time to restructure. It’s good to see that the task force will be heavy handed with its next round of funding for this industry, which has already received $17.4 billion – GM has asked for an additional 16.6 billion to top it off.
The new CEO would do well to look beyond trying to keep up with innovation at Toyota and Honda toward other players in the industry like Zipcar the wildly successful car sharing company that has turned car ownership on its head. People in dense cities don’t need to own their own vehicles and deal with parking hassles if they can rent cars by the hour or the day in their neighborhoods. If GM looked beyond the production and sale of motor vehicles, toward the jobs people are trying to get accomplished with their cars (comfortable, safe, convenient, affordable transportation) they’d have better luck coming up with products that people actually want to buy.