Beauty of the beasts

PUBLISHED : Friday, 05 June, 2009, 12:00am
UPDATED : Friday, 05 June, 2009, 12:00am

The gut reaction to the US government's bailout of the carmaker General Motors should be: 'Why?' Any company that loses billions of dollars year after year, due to bloated leadership, lack of accountability, overbearing contractual obligations and building goods that no one wants, deserves to die. Yet President Barack Obama has decided that the firm looms far too large in the American psyche to be allowed to slip into oblivion. When GM emerges from bankruptcy court with parts perceived as unprofitable sold off to make a leaner, meaner outfit, Americans will be the majority shareholders - whether they want to be or not.

Intelligence and common sense should dictate what shares we buy. The fundamentals of GM scream out: 'Buyer beware.' Shares bought at the US$70 peak were hovering around 70 US cents at the time of filing for bankruptcy protection on Monday. GM's market capitalisation nine years ago was US$59 billion; it was US$458 million on D-Day.

When the restructuring is complete, the company will have 40,000 people building vehicles in the US, one-tenth of the workforce three decades ago. During its heyday, in the 1950s, GM had 54 per cent of market share in the US; today, it is 19 per cent. These are figures to scare off investors, not inspire confidence.

GM's biggest failing was an inability to move with the times. The oil shock of 1973 did not rattle its management. They did not see fuel-efficient Japanese competition as a threat. Nor did they think that pensions and health coverage would, over time, become a financial burden.

The world was talking climate change in the 1990s and the company responded with an electric car that was ahead of the competition. Claimed fire risks and sluggish sales made it stop production. The response of management was to take on the military vehicle, the Hummer - among the least-fuel-efficient conveyances ever created - and achieve a market success through 'coolness'. Needless to say, Toyota's hybrid Prius filled the void and stole the market show when oil prices again soared. GM will re-enter the environmentally friendly car race next year with the Chevy Volt - perhaps too late.

GM's managers cannot be excused for their errors of judgment but, having said all that, I feel I must backtrack. Nostalgia is not such a bad thing. Nor are panache, style, white-walled tyres, tail fins, in-your-face grilles and hood ornaments - and chrome, lots of chrome. I am talking of the cars GM and the other majors of the US car industry, Ford and Chrysler, used to produce in the 1950s and 1960s.

My most treasured book as a child was one that featured page after glossy page of car pictures. They were all American, and had names like Eldorado Seville, Bel Air, Mustang, LeSabre and Thunderbird. I dreamed of being behind the wheel of a Cadillac, Chevrolet or Buick, Wayfarers strapped to my face and a blonde by my side. The differences between fantasy and fact have proved, in the intervening years, to be astoundingly stark.

That said, there is no comparison with the cars of those days and the ones Japanese factories churn out now. Granted, the Nissans, Toyotas and Hondas are more reliable, efficient and less polluting. They are compact and meet every budget and requirement. But they lack what is important in a car: personality.

GM and Chevrolet are in bankruptcy protection. Ford is not faring much better. Mr Obama has told them they have to produce fuel-efficient vehicles. They have to beat the Japanese at their own game. What to do?

To me, the solution is straightforward: go back to their drawing boards. Engine design and performance have to be worked on. I don't care what is under the hood, as long as it doesn't pollute. As important, though, is appearance.

Tail fins, plush interiors and plenty of shiny chrome are what is required. We should be aiming for better public transport, but private vehicles are an inevitable part of affluence. If we are going to have them, they may as well be things of beauty.

Peter Kammerer is a senior writer at the Post