Can GM keep its iconic status while casting a smaller shadow?
— -- General Motors' bankruptcy is the fourth-biggest, measured by assets just before filing for Chapter 11 protection, but it's No. 1 in symbolism: An American icon throws in the towel. The inventor of the car payment, the tailfin and planned obsolescence no longer can hack it.
No choice, CEO Fritz Henderson says in the court filing: "In the face of the global meltdown of the financial markets, and a liquidity crisis unprecedented in GM's 100-year history, there is only one way …"
There are GM contributions to celebrate, perhaps as many to vilify. But in either case, it's hard to ignore the sheer impact of the once-colossal U.S. car company. And it's hard not to wonder whether a smaller, post-Chapter-11 GM ever will have as much influence. And if not, if it's just another car company, will it prosper?
"It's sad to see an entity that was synonymous with everything that was great about this country become a ward of the government," says Ken Gross, automotive historian, writer and former director of the Petersen Automotive Museum in Los Angeles.
"Shame on GM's leadership," says Margaret Reardon in Binghamton, N.Y., who owned Pontiac Firebird muscle cars in the 1970s and '80s because nothing else gave her as much tingle, and now drives a Buick.
The brass "should have been removed" long ago, she says. "This did not happen overnight."
"GM has been here through thick and thin," says Jacqueline Thomas of Marietta, Pa. "It just doesn't seem possible."
Long before it came to this, GM held an exalted position. Charles "Engine Charlie" Wilson, president of GM at the time, and nominated for a Cabinet post, told a Senate hearing in 1953 that he always had believed "what was good for the country was good for General Motors, and vice versa." Wilson is often accused of arrogantly asserting that what's good for GM was good for the country. Both arguably are correct.
Founded in 1908 by William Durant, the holding company that became GM bought Buick, Oldsmobile, Pontiac, Cadillac. In 1919, it created auto loans so more people could buy cars. By the 1950s, it seemed an unstoppable industrial behemoth, owning more than 50% of U.S. new-vehicle sales in 1954, vs. 19% today.
The automaker's seemingly limitless future paralleled the booming optimism of World War II veterans, home and thriving in a country that had put its teenagers into uniform almost without warning and sent them off to defeat Hitler's spit-and-polish Nazis and Hirohito's fierce warriors, helped by GM's war production.
"Both economically and culturally, it's been one of the most important institutions out there," says Michael Davis, who teaches economics and finance at Southern Methodist University's Cox School of Business. He's also a car enthusiast and owns an older Ford Mustang. "We've been a car culture. We just love that stuff," because of GM, he says. "It's part of who we are."
The impact of GM's product and corporate innovations — not all good — can leave you speechless if you buy the modern line that the automaker is big and dumb. GM came up with:
Move 'em up
"A car for every purse and purpose," GM's early chief Alfred Sloan liked to say.
Davis says GM gets credit for "this whole notion that your first car would be a Chevy and then a Pontiac and so on, and you'd have a Cadillac when you moved to Florida" to retire.
Through the years, GM muddied its own message — was it better for a rising executive of the 1980s to buy an Oldsmobile or a Buick? — but the concept endures.
Toyota, for instance, will sell you a $12,000 Yaris economy sedan fresh out of school, offer you all manner of family cars and dutiful trucks as you mature and finally help you celebrate success in the sunset years with a $120,000 Lexus. Likewise, you can bookend your life with a Nissan Versa and an Infiniti M45. Or a Hyundai Accent and Genesis.
Standard of the world
Cadillac's bragged about that for years. It doesn't mean "the best," as you probably thought. It refers to standardization. Caddy won the honor in 1908. Three identical Cadillacs were shipped to England, torn apart and the components mixed up, then reassembled. The cars all ran, quite well; they were, indeed, identical and their parts interchangeable. For that, Caddy won the Dewar Trophy and the honorific "standard of the world." Until then, manufacturing parts so precisely that they were interchangeable had been rare.
Electric starter
Caddy again, in 1912. Using an electric motor to start the gasoline engine, instead of hand-cranking it and risking serious injury if the crank kicked back, was considered absurd. No room under the hood, scoffers said. Caddy made it work. "It revolutionized the automobile," historian Gross says. For one thing, it opened motoring to more women, in the minority then not only because they often lacked arm strength to hand-crank an engine, but also because they were put off by the compromising postures that went with cranking.
Electric car lead
Sure, GM is painted as the bad guy for killing its EV1. But when it was launched in 1996, it was the first battery car in modern times you could get at an automaker's showrooms — though only via lease and only in California and Arizona. GM said it scrapped the cars because it belatedly found a potential fire hazard in the first-generation models and wasn't making any money on the later versions.
Safety first?
From the company that gave us the rear-engine, air-cooled Corvair, branded by consumerist Ralph Nader's famous book as "unsafe at any speed?" Yes.
GM and Ford had the first test fleets equipped with airbags, and in 1973, GM offered the first bag-equipped car — an Oldsmobile — to regular buyers, expanding the feature to others in 1974. It pioneered the crash-test dummies widely used today and developed the first child-size dummy for measuring the force of airbags.
The Corvair? Not unsafe, it turned out. The National Highway Traffic Safety Administration says its archives show that it made a public announcement Aug. 12, 1972, and sent Corvair owners a letter, countering the Nader claim: "We have concluded that the handling and stability of the 1960 to 1963 Corvair does not result in abnormal potential for loss of control or rollover, and that the handling and stability performance is at least as good as the performance of some other contemporary vehicles, both foreign and domestic."
Too late; GM had killed the innovative 'Vair after the 1969 model year because sales had taken a hit.
V-8 muscle
The first modern V-8 engine showed up in the 1955 Chevy, an instant hit.
GM V-8's of today trace their lineage, faintly, to that original "small-block Chevy," and its offspring are among the most fuel-efficient V-8s.
It also invented the muscle car with a "competition engine package" for the 1960 Pontiac, followed by the 1961 Super Duty Pontiac Catalina with 389-cubic-inch V-8 and, most famously, plopped a 409-cubic-inch V-8 into the 1961 Chevy. That inspired the Beach Boys' classic 409, which injected the hot-car ethic deeply under America's skin.
Hardly the slow-acting giant it's known as today, GM re-invented the muscle-car genre when it put a V-8 in a midsize 1964 Pontiac and created the GTO.
Planned obsolescence
Also called the yearly model change, it gets criticized often. To keep Americans drooling and buying, GM radically changed styling annually.
The high cost of changing, every year, the big metal stamping dies that formed the body panels eventually drove less-wealthy automakers out of business. Ford was beside itself trying to counter GM's move from the elegant, vertical fins of the 1957 Chevy to the outer-space "batwing" horizontal fins and taillights of the '59. Ford finally decided a change in the rear roof pillar (the "C-post" in then-current lingo) was the best it could do for '59 Fords.
Attacking the messenger
Likewise often criticized, and a tactic that has become part of GM's latter-day image. Following Nader's critical book, GM hired private investigators to find dirt on Nader. When the unsuccessful sleuthing was exposed, GM had to apologize and pay. Nader used the money to establish a consumer lobby organization that still bedevils automakers.
Later, when pollution and safety regulations began to tighten, "Instead of taking every new government regulation and saying, 'Hey, we're the largest, we can do this,' they were marching the lawyers off to Washington," says Gross.
Now, most automakers lobby aggressively. In fact, lobbying for federal loans is why GM's alive today, though cloaked in Chapter 11 protection as it reinvents itself, shedding most brands to emerge — the plan says — as a lean machine, selling only Buick, Cadillac, Chevrolet and GMC models through a dramatically reduced dealer network.
Will the smaller GM have the muscle to influence the industry and culture as it has for years?
The Chevrolet Volt, to go into production next year, is seen as a small but compelling example of how GM can differentiate itself.
Volt is an electric car with on-board recharging via gasoline engine to overcome the worry about limited driving range that keeps many Americans from warming to battery cars.
The automaker has a fleet of 100 Chevy SUVs, converted to hydrogen fuel-cell operation, in the hands of consumers, well ahead of when Honda will get 100 Clarity fuel-cell models in the hands of real customers — though the Clarity is a built-from-scratch fuel-cell car, not a conversion.
And having fewer brands to market, dealers to serve and different vehicles to develop after it emerges from bankruptcy is GM's "chance to rebirth their brands and regain their luster," says Brad Coulter at turnaround specialist O'Keefe & Associates of Bloomfield, Mich.
Says Davis, the SMU economist: "I'm rooting for (GM). Speaking not as an economist but as a car guy, it would be wonderful if somehow they recaptured that luster, that magic. I'd like to think that somewhere there'll be another Corvette or 1964 GTO, whatever it would be; some really great car.
"Speaking as an economist, I'll give you the typical economist's answer: Time will tell."