Michael Davison

Michael Davison — Sat, 07 Mar 2009 00:00:00 +0000

This is almost a replay of the Chrysler crisis in the late 70s, when Chrysler sold their French subsidiary, Talbot, to Peugeot, which ultimately denied the Talbot/Chrysler Horizon to US sales, making Chrysler even more vulnerable until the US government gave Chrysler a ”Lockheed-type” loan to bail them out.

Lee Iaccoca, who ultimately managed to preserve Chrysler, called the sale of Talbot one of the stupidest decisions ever made by the management he replaced.

Unlike Chrysler, however, which had no other foreign subsidiaries other than Talbot, GM also has Vauxhall (GM-UK), Daewoo (GM-South Korea), GM-South Africa, GM-Australia, Saab and Chevrolet subsidiaries in Argentina, Brazil, Chile, Columbia, Ecuador, Egypt and Uruguay to help them through the crisis.

What they need to do is sell off the subsidiaries with no development branches first; those plants that just assemble cars for local markets.

Selling off their controlling share of Opel would be a big mistake for GM.

Charlotte

Charlotte — Sat, 07 Mar 2009 00:00:00 +0000

I dont know ANYTHING about the industry but i do know this,,in todays ecomomic crisis you cant be selling cars to people who are broke,,for 50,000.00 it just wont fly,,people cannot afford that,,make cheaper cars sell them cheaper and make them fuel efficent ,,i know thats a lot to ask but until its done,,cars are going down the tubes,,we need a good under 5ooo. dollar car that runs on little or NO fossil fuels ,,i saw one out of India a few months back was only 2,000.00 and it was fuel efficent ,(see this article for details) Rob Katz

June 27, 2006 — 07:13 am

India’s Model T: Tata’s $2000 Car Rob Katz

June 27, 2006 — 07:13 am

India’s Model T: Tata’s $2000 Car Out by 2008

Update: Lee Schipper, Director of Research for WRI’s Center for Sustainable Transport, comments below on the implications of a low-cost car for India.

A mass-produced, affordable auto revolution is coming to India. Or, as BoingBoing suggests, “make way for the hundred dollar laptop of automobiles:”

Tata Group Chief Ratan Tata told shareholders that the launch of the car would create a new paradigm in low-cost personal transport, carve out a new market segment and reach a broader base of the pyramid.

”The styling and designing of the car have been completed and prototypes are being tested in the plant. It will be a rear engine, 4-5 seat, four-door car with about a 30 horsepower engine,” Tata said in the company’s annual report for 2005-06.

The car will be launched in early 2008 and we believe it will be extremely attractive to the Indian consumer, particularly younger families, at a price level of about Rs one lakh, Tata said.

I absolutely love it when a big shot CEO uses terminology like “Base of the Pyramid,” because it demonstrates how some firms at least know the concept. Whether they are doing it in a sustainable, profitable way...anyway, while I love this concept from a BOP and economic development perspective, what worries me is twofold. First, what about the environmental impact of hundreds of thousands of additional cars on India’s already-congested roads? Answer to myself: it will be up to Tata to make these vehicles as fuel-efficient as possible. Second, will this push Indian development toward the US model of roads and highways and provide a disincentive to well-planned cities and public transport?

Original links via IndianRaj and SouthAsiaBiz. Original article in the Hindustan Times.

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Michael Davison

Charlotte