min-myinnersoul

Much of the press on the calamitous state of the US auto industry centered around General Motors. Spare a thought for Ford, which has quietly done some amazing things. Ford was the only one among the Big Three that did not take the US government bailout. They also were the only one that did not go into Chapter 11 bankruptcy. And yesterday, they announced pretty good 2009 results. They made a profit of $ 2.7 billion in 2009. Yes, t-h-e-y m-a-d-e a p-r-o-f-i-t- i-n 2-0-0-9 ; one of the most brutal years for the auto industry. They gained market share in the US. Their fourth quarter volumes were up 26%. By any standards, an impressive performance. Sure the numbers hide some real worries (as they always do). Their main business of selling cars actually lost $1.4 bn in 2009. That loss was offset by their finance arm – Ford Motor Credit which made a profit of $1.9 bn. (just goes to show that taking a loan to buy a car is for suckers). But in Ford’s favour, in the fourth quarter, the car bus...

Politicians should, in general, not meddle in business. A great illustration of this danger is the mess brewing in General Motors Europe. Facts of the case are as follows. When GM was entering bankruptcy last year, the fate of GM Europe was in serious doubt. In any case GM Europe had too much of manufacturing capacity in Germany, the UK , Spain and Belgium. Even under normal circumstances a big restructuring was inevitable. Now there was serious threat of complete closure. In waded the politicians. No less than the redoubtable Angela Merkel, Chancellor of Germany. She was coming up for an election. In Germany, auto workers are next only to God. No way was she allowing job losses amongst auto workers in Germany. So she forced an auction, put together a curious alliance of a Canadian spare parts manufacturer (Magna) and a Russian bank (Sberbank) to buy GM Europe. She then offered them $6.6 bn (yes 6.6 billion) and they had to commit no closures and job losses in Germany. Unsaid, but obvi...

On a clear day, you won’t see General Motors any more. At least the GM of yore. GM is being cut apart and fed to any meat eater in the vicinity. One titbit, Hummer , is going to an unexpected place. Hummer, for the auto uninitiated, is a gas guzzling Sport Utility Vehicle, particularly loved by the Americans. It was very popular, but is no longer so – its global sales declined by 62% in Q1. A few days back it was announced that Hummer would be acquired by Sichuan Tengzhong , a Chinese company based in Chengdu. This is not the most obvious of deals – lets put it that way. Why is an unknown Chinese company doing this acquisition ? The deal looks shaky for a number of reasons. Firstly Sichuan Tengzhong makes highway and bridge structural components, construction machinery , energy equipment and yes – trucks carrying cement mixers. What has this got to do with American SUVs ? Where is the business fit ? Secondly, Hummer is a gas guzzler on a steep decline. What will Tengzhong do with it. ...

If your sales grew last month by 25% in the largest car market in the world (at the moment) ; if you were No 2 in the market behind a faltering market leader; if you had beaten the Japanese nicely; if your two most famous brands are household names and aspirational in the market; if your other American rivals are nowhere in sight; you should be over the moon - Right? Wrong - for this company is GM China. And because of the troubles a continent away. GM has got everything right in China. Its beaten the Japanese. Its beaten the other Americans hollow. Volkswagen is the leader because of historical reasons ; they came into the market very early. They once had a market share of 50% - which is now down to the teens. Just pause for a moment. Worldwide the car industry is in doldrums with the bottom falling out of sales. And GM China announces that in March their sales grew by 25% over last year. Wow ! So here's a wild thought for GM. Get out of the US and move your headquarters to China....

I read the news from General Motors yesterday, that they are discontinuing their Pontiac line from next year , with some sadness. I grew up in the days when what was good for GM, was good for America. The best selling business book was, of course, "On a clear day, you can see General Motors". Any aspiring MBA graduate could reel off the famous five of GM - Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac. Every Hollywood movie of those days had one these beauties as a star character. GM was, after all, the largest company in the world. Those days, mass communication was still at its infancy. The internet had not arrived. Doordarshan had just made its tentative steps in India (with such wonderfully stimulating programs such as Krishidarshan). Yet all of us had known a lot about GM, even without stepping outside India and only seeing Ambassadors on Indian roads. Pontiac is 83 years old. It was introduced when Alfred P Sloan was the legendary chairman of GM. Its heydays were...