Tuesday, August 18, 2009

G.M. is apparently too determined to succeed

Ed Wallace at BusinessWeek points out what he considers yet another GM mistake:
There's a fundamental rule of a successful business: "underpromise and overdeliver." That concept has been around since the Studebaker Brothers were building wagons for the Civil War. After the war ended, they codified their business ethic in Studebaker's motto: "Always give a little more than you promise." Nothing better sums up GM's wrongheaded thinking than its execs' promise that the company will return to technological superiority once they finally bring the new Chevrolet Volt to market.
This may be true. The Volt has been so hyped at this point that it's bound to disappoint. At the same time, if G.M. tried to take a low-key approach, I can envision a lot of coverage claiming that a downtrodden G.M. had lost faith in its own products. I'm not sure the automaker can do anything right in the eyes of the mainstream media at this point.

1 comment:

  1. I think this comment is based on a fundamental misunderstanding of the regulatory terrain across which GM's strategic marketers have to maneuver.

    It's been known for a while that the EPA rules on mileage ratings for plug-in hybrids were poorly written, so that even the EPA didn't quite know what they meant. An internal discussion has been going on within two factions at the EPA as to how to clarify how they'll work.

    One of the EPA's guidelines to avoid legal and political minefields is that they don't interpret already-announced rules in a way that conflicts with important industry public commitments that were made on a best-available-knowledge basis.

    The original impetus for the Volt program, and any other plug-in hybrid, was to decrease national consumption of imported oil. Such consumption has negative implications for both the national balance of payments and national security. One faction within the Obama administration supports this interpretation of our national vehicle-fuel-economy goals, and therefore is very supportive of plug-in hybrids.

    Another faction of the Obama adminstration, though, supported by certain segments of the environmental community, wants vehicles to use less energy of all kinds. This faction would change the reporting rules for plug-in hybrids to require them to report some sort of equivalent-gasoline-consumption for the electricity generation process.

    GM started up the Volt development process during the Clinton and Bush administrations, per clear indications from various government elements that imported oil consumption was the target. At this late date, it's way too late to change the Volt program's energy focus. The Volt program, obviously, is critical to the future of GM.

    At its highest levels, GM recently concluded that there was a possibility that within the EPA, the use-less-energy-of-all-kinds faction was going to prevail, and the EPA would change the fuel econmy reporting rules so that plug-in hybrids would become essentially unsaleable.

    Thus GM decided to make their somewhat-early announcement, based on the preferred analysis method of the EPA's use-less-imported-oil faction. This establishes some "facts-on-the-ground", and legally and plitically makes it much less likely that the EPA would wreck GM's multi-year, multi-billion-dollar investment in the Volt, and all the car makers' existing vehicle planning based on the past twenty years' government guidance, by switching to the use-less-energy-of-all-kinds interpretation.


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