If it becomes clear in Washington that consumers have shut their wallets on GM and Chrysler, that bailout effort will be forced to an ignominious end. It will send the two companies into bankruptcy, where they can figure out how to emerge as viable, baggage-free entities.
Well, I was right and wrong.
As predicted, enough consumers to make a difference have shut their wallets on GM and Chrysler. Many have reopened them to Ford.
As predicted, despite a total of roughly $30 billion in taxpayer money (with much more to be dumped in shortly), enough consumers to make a difference forced the ignominious end known as bankruptcy on each company.
Sadly, the Obama administration has engineered exits from bankruptcy that, even if they occur (Chrysler is not yet a done deal, as yesterday’s news shows), are anything but baggage-free.
A new Rasmussen poll, if accurate, tells us that barring a major psychological shift, these exits will be in deep trouble coming out of the gate:
Just 42% of GM Owners Likely to Buy GM Again
Only 42% of those who currently own a General Motors car are even somewhat likely to buy a GM product for their next car. That figure includes just 30% who are Very Likely to do so.
The latest Rasmussen Reports national telephone survey shows that 43% of current GM owners are not likely to buy another GM car, while 16% are not sure.
….. Overall, among all adults, 16% say they are Very Likely to buy their next car from GM. That figure is slightly below the auto giant’s current share of the domestic auto market.
Another 10% of all adults are somewhat likely to buy from GM while 60% are not likely to do so.
The government bailout and takeover of General Motors remains very unpopular among the public. Just 26% of Americans believe the bailout was a good idea, and nearly as many support a boycott of GM products.
It looks like Rasmussen has reduced GM’s official market share of 19%-20% by taking out Saturn, Pontiac, and Hummer — which is a correct and very astute catch.
The first bolded paragraph wipes out the significance of the second. That because the company has lost all but 42% of its customers. That would lead you to conclude that only about 6.7% of the 16% who claim they will likely buy a GM car represents current GM customers who will stay loyal (16% market share times 42%). (Update: Zheesh — I cut and forgot to paste a sentence saying that the % is more like 8% or so, because some of GM’s now-former buyers have already made their presence felt in the sales numbers during the last five months.)
The point is that just to maintain its market share,
over about half of GM’s buyers coming out of bankruptcy will have to be new customers. Rasmussen says they are potentially there (if they mean what they’re saying), but they will still need to be won over and turned into closed deals. Anyone in sales knows that this is no easy task.
Then add in the following financial negatives: at least 60-90 days of significantly reduced advertising, which has already occurred during Chrysler’s bankruptcy, reducing the company’s consumer visibility and mindshare at the worst possible time; more car czar meddling and micromanagement; political cave-ins; and the Obama administration’s hostility towards light trucks, which make up well over half of the vehicles GM sells. Yikes.
And of course, GM’s competitors aren’t asleep. Ford, which itself foolishly sustained a two-year boycott by a pro-family organization until March of last year that probably cost it $1 billion or more, is now a bigger company than GM, is increasing production (i.e., isn’t sitting on months of unsold inventory), and is probably lengthening its lead on a daily basis. The Japanese transplants have stumbled a bit, but I don’t expect that to last.
So remind me: What are we getting for our tens of billions in bailout money?