Great cars. So why worry?

General Motors is filing for bankruptcy protection as we go to press. Ironic indeed for they are now making some of their best products ever…

(This blog appeared in our June 2009 issue as the last page Chicane)

You don’t even begin to understand how important a good product is until you live in a country where having the licence to produce something effectively gave you a market. India through the past half century had this unique business environment and consumers, if you could call us that, would line up for a car, a scooter or a telephone, irrespective of how good or bad it was.

Well, now the licence Raj as it was known is a thing of the past and consumerism has come to the fore. Every buyer wants quality in their products or they won’t buy. Companies have learnt the hard way not to take anyone for granted. And the fortunes of producers are decided at the cash counter.

One of the greatest symbols of consumerism worldwide, General Motors, is now in the tedious, yet necessary, process of seeking court protection in order to reorganise its business. As things stand, the cost of being in business is so much higher than the income the company makes out of it, it couldn’t survive without Government aid. But is GM shutting shop? Not one bit.

I returned from Dubai this month after testing the Camaro and Malibu. These are just two of the latest products from GM that join other interesting releases like the Cruze and a rejuvenated Terrain later on in this year. If the marque wasn’t appealing enough, the Camaro and Malibu communicate one facet very strongly. They cap this generation of GM products and highlight the excellent product quality, superb engineering and strong value of these new cars. With the current line-up GM can take the battle to its Japanese competition in every single segment and offer a model that looks better, drives better and is equally well engineered. So, we found it very ironic indeed that the company’s past excesses, its history of high labour costs and a lacklustre home market had to combine with the financial crisis to push it into bankruptcy protection.

That’s right, one of the most important phrases that is misquoted or misunderstood in this entire saga is that of what the court process involves. Rather than being liquidated, which would imply shutting shop, GM is using the protection available under US law to protect it from going bankrupt by giving it the breathing space to reorganise. And in GM’s favour, the US government is effectively supporting it by putting in 50 billion dollars.

I expect GM to come out of this episode with a lot of its flab trimmed off. The backoffice operations, manufacturing and supply chain will be unrecognisable. Hopefully the best products and brands will still be there on the other side. Cars like the Cruze, for instance. Designed and engineered by GM’s Korean operations, with the assistance of their European arm and manufactured in various locations around the world.

Or indeed the Camaro. Using the rear-wheel drive large car expertise that GM’s Holden operations have in Australia, the quintessential American muscle car has been engineered by various centres, tested all around the world and is being manufactured in Canada. Is it an American car? Only if you want to think so. In this age of globalisation and export driven economies, GM has already made the move to being a transglobal corporation. So, while GM’s core is being reorganised in the US, operations here in the Middle East continue to bring in products from the US, Europe, Mexico, Canada, Korea, Australia and other points. And while Hummer may find a new owner along with other brands like Opel, Vauxhall and Saab, we expect the Chevy badge to sail through alongwith Cadillac.

GM has been part of the motoring world for 109 years now. You don’t have to be American or a GM employee to hope that the company comes out better able to compete and produce some of the great new cars they have in their stable.

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