Even in a race of one-legged men, there's usually a winner. That's a fact that seems lost on Fortune's Alex Taylor Three Sticks. Writing for CNN Money, Taylor compares Ford's and GM's turnaround efforts (Chrysler's gone dark since private equity hoovered them up from Daimler). He brushes aside GM's third quarter losses ($1.6b without the tax write-off) and suggest that "most indicators put it in the lead." What indicators? Well, for starters, Ford isn't selling as many cars to fleet buyers, producing a greater drop in market share. [We have word that Mazda's taking over that part of the biz. More later.] Ford doesn't have as "rich" a mix of vehicles (i.e. GM has more duplicate and overlapping models). But the real clincher– so important that it bore repeating in picture captions– Rick Wagoner has been at GM longer than Alan Mulally has been at Ford. Ignoring the fact that this means Slick Rick has farted around for seven years without even suggesting a deadline for a return to profitability, Taylor states that Big Al's impact on Ford in the year he's been there "is only on the margin." While Taylor sees Ford taking until 2009 to start showing a profit, he reckons "most analysts expect GM to return to black ink next year." Really? Name one.
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You know who gets all horny about market share and think its the most important thing in the world? Idiots, that’s who. It is far better for a company to be small and profitable rather than the biggest corporate megamonster in the marketplace. That’s why GM stinks and Porsche rules. I don’t know why everybody’s getting indigestion about market share. Focus on profitability, for goodness sakes.
Rumour has it that Mr Wagoner actually holds an iron grip on the board of lazy managers directors. Hence, why he’s still there.
Mr Mulally still has plenty of time to prove himself, so this race could be drawn out.
Mr Kazoomaloo,
Whilst I agree profitability should be a company’s paramount objective, there are instances where snatching market share at the expense of profitability does yield good results. Take hybrids. Initially, they were unprofitable, which is why many car companies shunned them, but Toyota and Honda pushed and pushed until now they draw a good profit margin on them.
Toyota snatched no market share whatsoever with their hybrids and indeed, never stated that this was their intention. I am also keen to understand the per unit profit figures for their hybrids – what are they?
In a products intro phase a company is fighting to gain back the money they spent in R&D. That’s just common marketing. You start making a profit in the growth and maturity phases of the products life cycle. If you neglet to turn a profit, then “you’re doing it wrong!”
The only thing that we know from Wagoner’s longer tenure is that he has been proven incompetent. I always love to hear about the value of experience. Experience has no value unless it leads to better performance. Often, it has negative value.
And no, market share is not the most important thing. OTOH, complete lack of it is even worse. Microsoft seems to have done well with their marketshare strategies (but only because governments are too stupid to figure it out).
Marketshare/profit blather ending with: “That’s why GM stinks and Porsche rules.”
First off, Porsche cares deeply about market share in it’s chosen markets. Porsche dominates the global market for mid to high priced sports cars. If Porsche didn’t care about market share it never would have built the Boxster, a vehicle priced much below the 911 family and which took some business away from said 911s. Boxster was a smart move, and it was a move in part motivated by market share concerns.
Secondly, if Porsche had no interest in overall automotive market share it wouldn’t have seized control of VW nor would said VW publicly be launching a campaign to lower prices and increase volume in North America. VW also cares deeply about market share in it’s major markets.
Market share isn’t everything in running a business, but it is damn important. No company in any industry has demonstrated long term viability without also being keenly aware of market share.
The Taylor article makes some basic factual errors, such as his observations about Ford’s chances for profitability with the Escort (which are currently none — that nameplate was retired years ago) or stating that the CTS is Cadillac’s leading nameplate, when it is the Escalade that is Cadillac’s sales leader.
But in any case, I don’t see how Wagoner’s tenure is an indication of anything aside from the fact that he has been on the job for awhile. If anything, he has been on the job too long to have accomplished as little as he has.
While allowing Nissan reliability to slip has been an error, Ghosn has otherwise accomplished far more with far less time than has Wagoner. At least Mulally has identified the issues, we’ll see whether he has the time and resources to fix them.
I for one am PO’d that Mr Wagoner did not have his nose in the details enough to ensure a flawless launch of the new Malibu, Enclave, and CTS. The least he could have done is ensure cross-functional cooperation at all levels. This includes integration of marketing efforts against supply chain.
Toyota could afford to subsidize the Prius because they were making tons of money on their other products. GM is not making money. Big difference. Until GM changes its’ executives they will struggle from one quarter to another, with a new excuse each time as to why they are not making money. They have what? half of GMAC to sell. Betcha they kick themselve for not selling the whole sinking boat to Cerberus when they had a chance. Another screwup by the Rick.