Now GM can stop looking over its shoulder and focus on being the best it can be

Everyone knew it was inevitable. Today, Toyota finally passed General Motors in worldwide car sales.  If you read the news and soak in consumer sentiment on the Internet this morning, you'd get the impression that this is a terrible day for the 75 year king pin of the auto industry. I tend to keep my glass half full and disagree.

Sure, GM lost it's official Number One status. And with that loss, comes a knock to the collective company's ego. It also conclusively shows just how far GM has spiraled.

But, we already knew this. And, the company's reputation has been severely damaged for a number of years now. Instead, with the impending Toyota distraction (and it was a huge one) out of the way, GM can make real strides in its turnaround with the hopes of once again becoming a company that is known for quality, smart business practices and maybe even innovation (a future aspiration).

Just remember -- bigger certainly isn't always better when profits are non existent and the company's core products are simply unappealing and don't sell. General Motors took a big step forward by cutting away pieces of its broken company that simply did not make sense. Examples include the many factories that were closed and, much of its unprofitable rental car business that was shuttered and refocusing its brand strategies based on what consumers desire.

This company's management seems to have already moved on through consolidation and a renewed effort to try and build cars that people want and create more innovative marketing programs that are aimed at driving sales and changing its ailing reputation. Will GM succeed? Well, most are betting that GM will never again be seen as a leader. If leadership is all about size, I agree. Let's see if a smaller GM is a smarter and nimbler GM. That will be the test.

Comments

[Steven Zweig]

Ed,

Good point: "Just remember -- bigger certainly isn't always better when profits are non existent. . ."

A lot of people, managers, analysists, and investors alike, forget that at the end of the day, it's not how much you sold, it's how much money you make.

[ed]

Amen to that.

Many times, the larger a company becomes, the harder it is to actually make money becasue of all the inefficiencies that exist. It's very hard to go backwards...

[WithClue]

I'm a tad confused, a potential corollary to both of your comments is that this turn of events is somehow a bad thing for Toyota. Are y'all asserting that Toyota can expect financial trouble as a function of their status as the largest manufacturer?

[ed]

Not at all.

In fact, because Toyota was built in a different way, it seems to have the means to grow very profitably.

GM was/is saddled with a host of negative factors including: giant pensions, very poor brand strategy, terrible labor contracts, inefficiencies in manufacturing, cars that were behind the times and a company that could not change. This made GM a big, bloated company that "drove" a culture that couldn't win.

Bigger certainly can and is better if the company finds a way to stay innovative.

[Steven Zweig]

Getting bigger IS a *very* good thing--as long as it's getting bigger in the interest of increasing profits. But getting bigger just to be bigger, that's just ego. And business is not supposed to primarily about ego.