Some thoughts on the new GM

I'm obviously not an economist, but historical precedent alone is enough to convince me the new GM will also fail. There's so many reasons. It's hard to even think this when even the BBC is being so positive about it. Where to start?

1) It is 61% owned by the US Government. Ignoring the fact that nationalised industry is supposed to be a "commie evil" that Americans loathe (and most Americans are against the bailouts anyway), the fact is, no government is equipped to guide a car company from massive losses to even minimal profit. That's not really what Government is for anyway; even it /was/ full of auto industry experts I'd actually be worried. If GM's own executives, for generations now, have failed to adapt to market changes, how can Obama's fancy taskforce, likewise made up of, err, white, upper middle class nobodies...? The drain of GM on the US economy may even bring down Obama in the end.

2) The market, despite rosey predictions, will never pick up to where it was. And we can assume that if it does reach previous levels, customers of Toyota, Nissan, Honda, VW, Hyundai, Kia and the now-kicking-ass Ford are hardly likely to flock to buy a GM (or a Chrysler - oh wait, they only sell trucks and minivans). Only the French and Italians support their domestic manufacturers with blind loyalty. Not even the British bought Leyland to the same level after it was nationalised to prevent collapse. The market is naturally shrinking to a more sustainable level. There are already too many companies building too many cars. There is no longer any room for GM or Chrysler. They remain the weakest players, no matter what anyone says.

3) Can we compare this to BL? I think so. BL, like GM, was a massive operation employing thousands of people across many inefficient and antiquated factories, selling too many brands and failing to adapt as fast as the next wave of successful companies. It was simply unthinkable to "let them fail" so they were propped up year after year with public money. Brands were shed, leaders replaced, new guys brought in, mergers attempted, parts sold off. All it does is slow the decline whilst costing everyone a lot more in the long run (and what about the damage to other companies, especially Ford, by keeping two subsidized players in the game?). The new GM will not magically sell enough cars now to be profitable. They didn't sell them last year, why would they now? They have fewer dealers and fewer incentives. They've also reduced their capacity to build new cars, so even if they do want to ramp up in response to the market, they can't. Also, doesn't it strike you as unfair that a company can screw it up for so long, file for Chapter 11, sell the best bits to the same guys, shed the worst bits with half the debt, and then try again, all the while being funded by the public of two countries?