GM (GM) CEO Rick Wagoner got kick upstairs to the realm of the Zeppelin pilots yesterday. The company said that he did not lose any of his authority, but it put in a new COO, Frederick "Fritz" Henderson, to run daily operations. Mr. Wagoner will work on overseas growth and advanced technology. In other words, he has been pushed to the margins of management.
Wagoner’s sin was that he could not field a slate of products to get back sales in North America. Last month GM’s sales in its home market fell 13%. Toyota (TM) is still picking up a larger part of the pie each year. If GM’s share drops much below its current 25%, it is hard to imagine that the company will not continue to lose billions of dollars in North American every year for the next several years, at least.
While Wagoner did cut costs and get a nice deal with the UAW, GM still has no group of "hot" product to put up against the competition. The car industry, like all others, is not, in the end, about cutting costs. Revenue matters. Wagoneer never got that part right.
While GM is doing well in South American and Asia, competition is heating up in those regions as well. None of the big car markets is a cake walk. GM can’t count on China sales to bail it out.
GM builds good cars. The quality has improved. But, Wagoner could not increase the "feet into the showroom" factor for his company.
Douglas A. McIntyre
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