Should Ghosn take on the CEO job at GM? And why the bailout is not a good idea.

After the question “How are you guys doing, with all your automotive work I mean – business must be tough?” (answer is – business is better than ever – when things are tough our clients thankfully understand the importance of research to guide multi million decisions) the question we get most often in recent days from our North American and French clients is: “Should Carlos Ghosn take the GM CEO job?”

The answer: No. Unless he is slightly crazy or just wants to make a serious amount of cash.

Our perspective is that he (as any other incoming or incumbent (incompetent?) person) cannot make enough of a difference in the flawed business model that is the Big Three. Without a clean break (read: complete control over reorganization and potentially the B word) there is no way of reducing the size of the companies that is necessary in the time frame afforded to them before things get much worse. We strongly believe that bailing out, subsidizing, lending, supporting, call it what you wish will only delay the inevitable while shareholders and employees continue to lose value and risk the future.

Now, it is true that people will lose their job in a bankruptcy scenario and that is terrible. But what pundits tend to forget is that American consumers continue to drive and will continue to buy vehicles. And so – after a period of hardship for employees and suppliers (including us) – new equity owners will continue to design, manufacture and sell vehicles out of some of the affected facilities in a profitable manner.

Most Americans prefer to purchase a vehicle that is built here – they care less about who exactly built it and they understand that foreign money might own a big chunk of the “American” car company they are purchasing from.

It’s time to look further down the road and really retool the automotive industry in the U.S.

Follow-up:
Example of no end in sight: Likely to be back for more…

Advertisements
Tagged , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: