What GM REALLY needs to do...

So here's what we have so far: Rick Wagoner is tossed out as CEO and the remaining team puts forth a "plan" that is really just incremental change instead of the real change required.

If GM wants to survive, it is going to have to make some major overhauls. As a 20-year industry veteran, here is my prescription:

1) Reduce white-collar waste. This is a clear case where size matters. Toyota's US headquarters staff is tiny compared to GM and nobody can argue that they are less effective. As a former GM vendor, I could never shake the impression that half of the GM white-collar staff was sitting around making work for the other half. Start by dismissing any staff member whose social security number ends in an even number (or odd, doesn't matter). The exceptions: Engineering and market research. Sure the dismissed workers would require a buyout, but the whole company is bloated.

2) New leadership. Wagoner is gone, but there are still a ton of his cronies, GM lifers, who are calling the shots. Time to stop rewarding those who brought the company to where it is today. Anyone else notice that Ford is the only domestic that is doing well? Most will attribute it to the leadership of Mullaly, who came to Ford from Boeing. Wagoner was not enough. GM must get rid of the top three layers, let the young guns rise, and bring in someone fresh and successful from outside automotive. Maybe after this is done GM will finally shake its "whack-a-mole" mentality where new and radical ideas are cause for dismissal.

3) Consolidate brands. Kill Hummer. Nobody wants it and the vehicles are the most earth-damaging of any car division. And let SAAB go back to being its quirky self. As for the others, GM has already made some strides consolidating Buick, Pontiac, and GMC, however they could have gone farther. My recommendation is that GM folds Saturn into that group and eliminate overlapping models. Saturn becomes the entry level brand, Pontiac the sporty brand, Buick the luxury brand, and GMC for trucks.

Saturn should keep the Astra, Aura, and Vue. Kill the Outlook and as much as I love the styling of the Sky, it either has to go or becomes a Pontiac. Buyers who are moving up then have two choices, Buick for luxury or Pontiac for sporty. Buick should keep the LaCrosse, Lucerne, and Enclave, while Pontiac keeps the G8 and either the Solstice or the Sky. Then, of course, Pontiac should see the return of the Firebird. GMC should keep the pickups, big van, and Yukon and kill the Acadia and Terrain.

As for Chevy, kill the boring as hell Cobalt when the Cruze comes out, and the new Malibu has made it very easy to kill the Impala.

And Cadillac should continue as a stand-alone, however I think Caddy needs a refreshed badge. Get rid of the Grandpa-screaming wreaths for starters. Want to be like BMW and M-B? They have nice, clean badges. Also, I think Caddy deserves a "halo" car like the Sixteen. Keep it to a few units a year, but it would go a long way to change how people think about Cadillac and GM.

4) Better engineering. Ask any engineer at GM and they'll tell you that they seem to reinvent the wheel for every model. GM just has too many unique parts. A Honda ignition switch is a Honda ignition switch, no matter the model. It is long overdue for GM to have more commonality of parts, especially those that the consumer doesn't see. Furthermore, GM should set an engineering goal of reducing the number of parts per vehicle by 20%.

5) Fix retailing. GM needs nothing short of a revolution in retailing. The best investment GM has made in the last decade is the Auto Show in Motion (of course, it got killed by a grizzled old fart high in the food chain who preferred putting more incentives on the vehicles instead). It is no secret that there are way too many dealers and they are often the weak link. The answer? Put GM Experience Centers in the top 25 markets across the country where consumers can come test drive any GM model and compare it head-to-head with the competition. Also, let consumers rent the vehicle they are considering for $15 per day (up to 3 days). Studies show customers are far more likely to buy if they spend more time with a product.

At these GM Experience Centers, consumers can order, customize, and finance their vehicle and arrange for pickup at one of the local dealers (fewer in number than there are today). This would relieve the dealerships of increasingly expensive sales staffs and allow them to focus on the more profitable used car and service operations.

This would also allow more uniformity of processes and vendors. Apologists in the industry scream "but dealers are entrepreneurs!" Bullshit. Dealers are often the most ham-handed, unsophisticated businesspeople out there. Anyone ever hear of the concept of economies of scale? Today they usually kill all brand equity just to steal a deal from the guy 6 miles away. A more coordinated marketing system is definitely called for.

Having said that, I do think GM is on the right track when it comes to vehicle value protection, payment protection (even if they did have to follow Hyundai's lead), enhanced warranties, and OnStar. In fact, I think they should make the one-year standard OnStar a two-year deal.

6) Health care. Time for GM to show corporate leadership and tell Congress that their lack of progress fixing the health care system is a major contributor to GM's problems today. Wagoner started to talk about the need for a single-payer system before the economy totally fell apart but then stopped talking about it. Time to bring it up again with conviction.

More later...