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The New Economy

You just bought a car company. Now what?

(Page 2 of 2)



Keith Johnson, the Wall Street Journal's eco-blogger, wonders if GM will need to abandon the Volt, the company's plug-in electric hybrid vehichle scheduled to go on sale late next year. Noting the compact's $40,000 price tag, Mr. Johnson lays out the options:

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GM can focus on making mass-market cars that sell well and abandon the Volt. Or it can carry on with the Volt and hope either costs come down or consumers suddenly change their habits and run out to buy a $40,000 compact sedan.

Treehugger's Michael Graham Richard calls this a false choice. Oil was selling at $20 a barrell in 1997. What if Toyota decided to abandon the Prius then? Where would it be now?

If GM wants to be successful in the future, it has to aim for the future, not for the present or the past. So the advice of dropping the Volt because it is too expensive now is simply shortsighted.

Mr. Richard notes that this is almost exactly what GM did in 2003, when it scrapped its EV1 program.Viable or not, it looks as though the Volt is here to stay. As Autoblog Green reports, the company has stated that the electric car will play a key role in the "new GM."

Last December the LA Times's Pulitzer Prize-winning automotive writer Dan Neil drew both praise and scorn (but mostly scorn) with an op-ed titled "Nationalize GM," in which he called for a government takeover of the ailing company. Now that the government has done exactly that, he looks back at where it all went wrong.

His conclusion: the collapse of the US auto market, gas prices, and the credit crisis. Also, the company seemed far too obsessed with extending its market share, even if doing so meant losing money.

But Neil remains optimistic about the automaker's future. He writes:

The post-imperial GM will be smaller, leaner, smarter and hungrier. I hope. Bankruptcy's purifying fire will burn away debt and, as important, a legacy of comfortable arrogance. And it will be truer than ever: What's good for GM is good for America.

- Monitor staffer Eoin O'Carroll blogs about the environment.

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