Will the U.S. Automakers Survive?

I've decided to change gears today and talk a little bit about the economy. Keep in mind I'm no economist. I was frustrated by an Associated Press story yesterday that reported on General Motors (GM) stock price hitting a 70 year low. I have always bought GM products, yet 4 years ago when I purchased my last car, I was given reason to pause. I'm not surprised that GM is in trouble; serious trouble.

As I purchased my Pontiac Vibe in 2005 (4 wheel drive, 31 MPG, mini SUV), I asked the salesman what the construction next door was all about. He told me that they were building a new Hummer dealership. I was shocked! Didn't GM have a clue about the future of our oil supplies? I did, and I don't sit in or anywhere near their boardroom. How can these captains of industry be so clueless?

I did a little research and came across GM's 4 point turnaround plan from November, 2005. If the people making the decisions then are the same people today, my prediction is that GM is going down and shouldn't get any more taxpayer money. In the report, it is mentioned that Pontiac G6 sales were up 100% in 2005 vs. 2004 (a car with good gas mileage). They reported the HUMMER brand had posted its largest increase, up 86% with the launch of the H3s (a vehicle with terrible gas mileage). The plan called for rolling out luxury SUVs, large pickup trucks and entry luxury cars (vehicles with poor gas mileage).

When people in a boardroom are so far removed from Main Street, they just can't seem to get it right. GM's new approach (2009) is to restructure the company by focusing on the core brands, Chevrolet, Cadillac, Buick, and GMC. They probably have more Pontiac's on the road but Pontiac will become a highly focused niche brand. Saturn will be phased out. Can you see a father telling his son: why don't you go down to the dealership and buy yourself a Buick, Chevrolet, Cadillac or GMC truck. Ya, these brands are real sexy for today's youth.

If I had to bet on an American car company, I'd bet on Ford. They managed to have enough cash to avoid Federal loans at this time. In the very little bit of research I did, they seem to be competing very well overseas. In one report I saw, Ford placed 3rd in the European Union and 1st in Ireland. My past problem with Ford was poor mileage performance, but I think their team has been turning that around. Heck, I'm no financial guru, so don't listen to me; however, I'm going to suggest that the current stock price of $1.85 per share might be a good opportunity. With incentives to buy cars in the Stimulus Bill, and help in the credit markets, we will start buying cars again. Ford is my bet to survive and get through this. GM; I think you may have lost me as a customer.

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