By

 Dr. Wilson Triviño

“It feels like we are in a recession”, stated Tory Clarke, President of General Motors (GM) of North America in response to the question “if we were in a recession?”   before a group of business leaders at the Atlanta Press Club.  Clarke was in Atlanta on March eleventh as part of a nationwide tour to with as he put it, “to meet with the voters” of GM.  Consumers make the choices and GM wants to make sure they are responding to their needs. 

Clarke prefaces his comments, “that even though the formal definition of two quarters of negative growth had not been met, GM has experienced six quarters of contraction.  The company builds about seventeen million units a year, but has only reached sixteen million units of sales last year”.   Clarke is optimistic that the down turn in the economy is bottoming out. He also pointed out that with stabilizing of the mortgage crisis and the President’s tax rebate, consumers will get their balance sheets in order.

            Clarke worked in China in 2005 and he observed some astonishing trends. The automotive sector is a global industry which is at a cross roads today.  Three things are facing car makers.  The first is gaining energy security.  Where is the energy going to come from?  As the dollar weakens, oil cost rises and so does inflation.  The second is climate change.  As to the role of the auto industry in facing environmental challenges, it is better to side with the conservative side and focus on preserving the environment.  The third is the cost of transportation.  This is factoring the cost of the vehicle and energy to get from point A to point B.  

            What is GM doing to meet these concerns?  They are researching ways to adapt their cars to this new market.  The obstacles with alternative fueled engines to combustion engines are that that the combustion engine has a hundred year lead in research and design. Alternative fuels  include electric, hydrogen power, or hybrids that are in the early design stages.

            The newest generation of hybrids has many consumer advantages.  They are very quiet.  They have significant power and the driving range has been expanded.  Asked “why is the cost so much more for a hybrid that a conventional combustion engine?”  Clarke responded that, “one reason for the higher expense is that the car comes with two power trains, an electric and combustion.”  This means that you have in essence two different engines instead of one. 

            GM is going through a transition and the closing of the plant in Doraville, Georgia reflects that shift.  This plant produces the mini-van which the only market is north of the border in Canada.  The era of the mini-van has vanished. The market was good with this style when one company dominated, but now there are a half a dozen. This is way too much competition. There is not another product that could be made at the Doraville plant without a major retooling. This resulted in corporate GM to shut down this plant.  

              Clarke also touched on  possible reforms within the dealer system network, it is a system that evolved after War World II and the market is saturated in some areas.  After the war, GM did not have the capital to finance to these dealerships.  This allowed the evolution of the dealer model to develop organically to maximize sales.  Since that time, the approach has changed. The dealers west of the Mississippi evolved differently than the Eastern states. Changes will have to be negotiated with the independently owned dealerships.

            Atlanta is a great market for innovation and the generation of Flexfuel vehicles, referred to as gas-friendly to gas-free should be on the road next to you soon.

 As the auto industry adapts to the new demands of its consumers, GM’s executives react to recession worries.

Political Scientist Dr. Wilson Triviño resides in Marietta, Georgia and is a speaker and writer for ABC Vision.  A consulting firm that focuses on leadership, change, and innovation. He may be reached at abcvision@gmail.com