GM Headed for Bankruptcy Again? Nothing More than "Fatuous Twaddle" Says Lutz
Despite a $7.6-billion profit in 2011 and $2.5 billion in the first two quarters of 2012, GM "seems unable to develop products that are truly competitive in the U.S. market," Woodhill wrote this week. He serves on the leadership council of the ultraconservative, anti-tax nonprofit Club For Growth.
Lutz responded in a Forbes column titled: "Chicken Little's Second GM Bankruptcy: The Gold Medal For Silly Op-Ed Pieces."
"The fact that he would focus on GM's admittedly-lower U.S. market share as a harbinger of impending doom demonstrates the most profound lack of understanding of the vehicle business.
He went on to write:
GM is now doing exactly what critics, for decades, said it should be doing: making money in the car business. And that business is being well led: the compact Chevrolet “Cruze”, at last check, was selling roughly one million units globally and in the running for the world’s best selling compact title. The small Chevrolet “Sonic” leads its segment, and the new Cadillac ATS has been widely praised as being at least on a par with the best of the teutonic offerings.
And all of this US-centric analysis completely misses the point that GM’s strength is in its global reach, demonstrated foremost by its huge, and profitable, success in China, a market that is in the process of dwarfing the US in size. GM is very well positioned in Latin America and the former Eastern Block. (Western Europe, its economy slumping, is admittedly an anvil around GM’s neck, but it is for every other producer, as well).
GM is profitable and enjoys a positive cash flow. Its products are very well accepted around the globe. No other car company has yet demonstrated the ability to duplicate the Chevrolet “Volt”, arguably the most technologically-advanced car on the planet. No other company can match the performance of the Corvette ZR-1 at anywhere near the price. No other company can challenge GM’s dominance in full-size SUVs, nor does any other maker offer the advanced hybrid system that makes these large vehicles economically and environmentally acceptable.
GM is not without its challenges and problems: name me a company where you can’t make that statement. But GM is a design, engineering, manufacturing and marketing powerhouse. The company is gaining strength. It remembers the lessons of the past. It does not shy from its well-documented problems, such as GM Europe; instead, it addresses them head-on.
To suggest that a cash-rich, profitable company with these characteristics is about to go under is, to me, “fatuous twaddle”. Mr. Woodhill should have done better.