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GM: We're Happy to Be Number Two




“We’re number two, but we try harder.”

Okay, maybe I’m just getting up in years, but I’m sure a large number of TheCarConnection.com’s loyal readers remember that classic ad tagline from Avis, the rent-a-car also-ran. But soon, you may begin hearing the same line from the folks at General Motors.

For a brief, shining moment, Toyota actually outsold the General, during the second quarter of 2007, though it slipped back during the rest of the year. In 2008, if the Japanese maker holds to its production plans, it very well may take the top spot again, and this time hold it, cautions analyst Joe Phillippi.

Does it matter? Depends on whom you ask. The folks at Toyota, notably including CEO Katsuaki Watanabe, insist they’re not paying attention. Believe it, if you wish. There’s little doubt that being number one, in-and-of-itself, is indeed not the driving force at Toyota, but growth is definitely part of their plan, and if they can flip past GM, in the process, so be it.

As to the U.S. maker, it’s been the industry’s global leader for three quarters of a century, ever since Henry Ford decided to hang onto his Model T a few years too long. Being top dog has been a matter of pride and passion, but according to some senior executives, it no longer matters.

“It sells newspapers,” insists Vice Chairman Bob Lutz, “but to us, operationally, it has no impact, whatsoever.” If anything, Lutz tells TheCarConnection that falling behind Toyota may be a good thing. “There’s a certain benefit to the internal culture to being number two.”

We’ll leave it to you to decide whether that’s just a self-serving or self-deluding way to look at the current situation. But it certainly underscores the dramatic changes the auto industry is undergoing, both here in the U.S., and around the world.

Now consider these figures: It wasn’t all that long ago that North America accounted for three of every four cars GM sold. Today, however, that’s down to 50 percent. And with the automaker pushing hard in emerging markets like China, Russia and India, Lutz predicts the share will soon slip to just 25 percent.

“The United States is become smaller and smaller and smaller, and in not too many years, it’s going to tip,” says the septuagenarian executive.

What does that mean? A number of things.

First, as GM expands overseas, internationally, it is shifting resources to growth markets, like China and India. They get the new plants and lots of new products.

And the products developed for more stable and established markets, including the U.S. and Western Europe, are less likely to be unique. Take the new Saturn Astra, which is also sold around the world as the Opel Astra, and it was primarily designed and engineered in Europe. The little Chevy Beat minicar, which GM recently approved, was developed in Korea and will be built in a variety of global plants, but almost certainly not in the U.S., even if it’s eventually sold here. The exception will be niche products, like pickups, which may be limited to a few, key markets.

“If our returns (from a market like China) are way, way beyond what we get in the U.S., guess where our money is going to go,” asks Lutz.

Eventually, GM hopes, all this will reduce the company’s dependence upon the U.S. market – and its vulnerability to swings in the market, whether from competition or downturns in the American economy.

“We have to get people used to the idea that General Motors is a global company,” says Lutz, one that “just happens to be based in the U.S.”

2008 Detroit Auto Show Coverage. Ford F-150, Hyundai Genesis and Corvette ZR1. by TCC Team (2008-01-017)
 
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Comments (8)
  1. Lutz is 100% correct, GM is a global company and needs to put money where it is needed, not where people may think it should be. I am happy and sad about the UAW people getting bought out, but on the other hand GM would not be in business if they paid everyone 80k a year to bolt together its vehicles.
     
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  2. and i'm glad i'm not a multi-millionaire. what they should be glad about is still being in business.
     
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  3. When you consider that the US contains only 5% of the World population, you don't have to be a math major to see that we have little chance of holding on to being #1 at much of anything once Asia's economy kicks in.

    It will be interesting to see how GM, Ford and Chrysler treat the US as we dwindle in importance to their bottom line. I think GM may become the leader of sorts, as those stockholders who hold tight on the corporate leash walk their dog on the greener pastures of foreign soil.

    One only need to look to Detroit to see what may lie ahead for the rest of the country.
     
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  4. Look at the big picture; a global brand can sway an entire market segment. All those fancy German cars people woo to are beginning to be really American. You cant get a more diverse workforce than that.

    So for now GM may seem to slip to number 2, but I beleive if they play their cards right (which they have for the past five years), by capturing the Chinese, Indian and Russian market, they will become the largest auto manufacturer again, and this time by far.

    All those cuts are for another very important reason: we will get GM cars from overseas, American soil will no longer be the main distributor.
     
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  5. I say bull---- noboby wants to be #2. Everyboby knows what #2 is. thats like saying New England will be alright losing the AFC championship, because at lease their #2
    I DON'T THINK SO !
     
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  6. WOW! It's the first time in my life that I listen a BIG SHOT in the auto business who says such a stupid statement.Nobody in the free world aims at being no 2 in any type of business.What is this overpaid man think of gm customers?Probably that the majority are stupid and they are buying the competition's product and they will come back some day?
    I was a car dealer for more than 25 years and the product was bad and the head office never believed the dealer.As bad as the FORD MOTOR CO THINKING!where are you going?
     
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  7. Typical GM spin. GM Management never could regain their American market share as they struggle to hang on to what they have. If you can't beat them at home what make you think they can beat them in the world market.

    By the way did anyone remind Bob Lutz that Number Two is the "First Loser to Number One" ?
     
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  8. "If you can’t beat them at home what make you think they can beat them in the world market." -

    I am living in Germany and GM actually IS beating them in the world-market!!! Obviously you missed some information. GM is selling record-numbers of vehicles in a row over here in Europe. Chevrolet is one of the fastest growing brands in Europe and if I'm not mistaken, Chevy (whereas GM DAT-cars) already outsold Smart over here. At the Bochum Opel-assembly-lines they had to work overtime to meet the demand from Russia. Last year GM was selling more than 2-million-vehicles in Europe, rising tendency.
     
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