It used to be said that what was good for General Motors was good for America. This is clearly no longer true. But could what is good for America be good for General Motors?
General Motors posted a $10.4 billion loss in 2005 and continues to struggle financially. In June 2008, GM has again resorted to long-term no-interest loans to boost faltering sales after they fell 17% to the end of May compared to the same period in 2007. On 26 June 2008, GM stock fell to its lowest price in 40 years.
GM held 60 per cent of the American car market in 1960. In 2007, Toyota pipped GM as the biggest seller globally and is threatening to outsell GM on its home turf.
Ford is faring no better and their F-series pick-up truck, the top selling vehicle for 26 years, has been displaced by the Honda Civic.
The price of oil is now more than 10 times what it was in the late 1990’s when Toyota started to sell the Prius, a hybrid electric-petrol car. Five years later, GM officially killed off its electric car initiative. This allowed Toyota to position itself as the lower fuel consumption and more environmentally friendly company. GM has now revived plans for an electric car (as has Nissan and others) but GM may never be able to catch up.
Facing the twin concerns of rising fuel prices and concerns about global warming caused by burning fossil fuels, car buyers are deserting the Detroit-based manufacturers.
Perhaps GM should now look to a different future than playing catch-up with Toyota.
Edwin Black, in his 2006 book, Internal Combustion, devotes a chapter to documenting a conspiracy starting some 80 years ago, in which GM targeted trolley systems across America for monopolistic takeovers and systematic irreversible conversion from electric streetcars to gasoline and diesel burning buses. Then in many cases those bus fleets also disappeared , leaving urban populations without public transport.
GM had partners who also wanted monopolistic supply contracts for the bus fleets. National City Lines was established to achieve this and companies such as Standard Oil of California, Phillips petroleum, and Firestone Tires participated.
Perhaps the future for GM is to provide public transport again. They could build electric trains and trolleys, install tracks and charge congested, polluted cities across America to operate public transport services.
This would be good for an America which is addicted to ever more expensive foreign oil and may even be good for GM.
Charlie Nelson
June 2008