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Friday, April 08, 2005

The Los Angeles Times' Dan Neil Is Right - General Motors Needs New Blood at the Top

General Motors has cancelled an estimated $10 million worth of advertising with The Los Angeles Times in protest of what the Detroit giant calls a series of inaccurate editorial products. Apparently the last straw was a column by the Times' Pulitzer Award-winning automotive opinion columnist Dan Neil, "An American Idle."

Neil called for a major housecleaning of the top executive echelons at GM, including GM Chairman and Chief Executive Rick Waggoner. Neil pointed to GM's continued loss of domestic market share and the apparent absence of a credible recovery plan as justification for sweeping out the present executive leadership.

Noting GM product czar Bob Lutz' widely publicized comments about the possibility of the Pontiac and/or Buick divisions being killed, Neil offered this summary observation about the state of things at GM:

"GM is a morass of a business case, but one thing seems clear enough, and Lutz's mistake was to state the obvious and then recant: The company's multiplicity of divisions and models is turning into a circular firing squad.
"How can four nearly identical minivans — one each for Pontiac, Buick, Chevrolet and Saturn — be anything but a waste of resources? Ditto the Four Horsemen of Suburbia, the Buick Rainier, Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X. How does the Pontiac Montana minivan square with Pontiac as the "Excitement" division?
"Why, exactly, is GMC on this Earth?"

I covered the automotive industry for many years at The Washington Times and continue to maintain an active editorial interest in the biggest of what used to be the Big Three. I grew up in a Chevy loving family. But Neil is exactly right about GM's problem - it is still trying to function as the company established by Alfred Sloan, with a division for every taste and pocketbook.

The time remaining for GM to fix itself is getting shorter and shorter. And journalists covering the industry have heard too many times before in the past 30 years that this time, the new guy's plan is going to work. Sooner or later, GM has to reinvent itself. Or go the way of the Oakland Motor Company.

Should GM penalize the Times for publishing a harsh editorial opinion like Neil's column? Captain Ed at Captain's Quarters thinks GM's decision is a healthy one for the MSM because it sends a message about accurate journalism. Unfortunately, encouraging accurate journalism has nothing to do with advertising strategies in Detroit or any other automobile company. If it did, we wouldn't still be seeing GM spots on NBC. Remember the story about exploding pickups?

UPDATE: Riehl World View has some very interesting observations about the several backstory lines likely at work behind GM's decision:

"More dynamics than one can imagine went into the GM decision to give the LA Times a slight smack on the wrist. And it is no more than that, as individual dealers - which spend the vast majority of newspaper automotive advertising dollars, will still be advertising. GM did NOT say it was stopping its dealer subsidization programs, only its Corporate spending. Their dealers would revolt if that happened."

RWV has the benefit of experience at several Fortune 500 corporations, so this post is worth pondering for those who seek to understand how GM thinking could lead to a decision to slap one of the nation's largest dailies on the wrist. Red Staters, are you listening?