Too soon for a GM victory lapKerkorian selling his stock removes a big psychological barrier. But beleaguered General Motors CEO Rick Wagoner still faces many hurdles ahead. (Fortune) -- General Motors' Rick Wagoner must feel like a runner in the early stages of a long steeplechase race. He's crossed a couple of hurdles, but stretching out before him are many more before he can reach the finish line. Seeing Kirk Kerkorian slink away after selling his GM (Charts) stock was not on Wagoner's to-do list, but it removes a large psychological barrier from the mind of the beleaguered GM CEO. With Kerkorian lurking in the background, there was always potential for the kind of mischief that causes sleepless nights. Now that billionaire investor Kerkorian is gone, Wagoner can continue to work at his own measured pace without fear of outside interference. Sometimes, though, that pace is too measured. Patience is both Wagoner's best and worst quality.
Closing the GMAC deal was on Wagoner's to-do list and now he can cross that off. Selling the finance company will eventually net GM $14 billion in cash but the company gives up control of its most profitable operation. A lively topic for the hot stove league this winter will be who did the right thing: GM or Ford? Like GM, the No. 2 U.S. automaker also needed to raise cash, but Ford (Charts) kept its finance unit and decided to hock its assets instead, thus adding to the load of debt it will eventually have to pay off. The next item on Wagoner's punch list is reaching agreement with Delphi and its creditors over the size of GM's obligation to the parts maker and its workers. The answer is a big number, between $6 billion and $7.5 billion, but getting the deal done - perhaps before the end of the year - will eliminate another uncertainty hanging over the company. Wagoner has a few other hurdles further out in the future, such as contract negotiations with the UAW in the summer of 2007, but his major efforts from here on out should be devoted to rebuilding GM's miserable image. To the everlasting frustration of Wagoner and his management team, bad news tends to hang on GM like paparazzi on Lindsay Lohan. Bring up GM at a cocktail party and you will probably hear stories from as far back as the 1970s about rusty X-cars and Oldsmobiles with Chevrolet engines. Getting Wagoner to make a speech or give an interview used to be an impossible job, but lately he has seen the logic in becoming the cheerleading face of the giant corporation. So he was out in Los Angeles last week banging the drum for GM's technological capabilities. Like everyone else in Detroit, he's tired of hearing about how Toyota (Charts) and Honda (Charts) pioneered hybrids while GM dropped the ball so, in addition to fuel cells, Wagoner said GM would be introducing an advanced hybrid with bigger batteries called the plug-in hybrid. But technology probably isn't going to move the needle for GM. The company has a history of getting it not quite right. Its in-the-car telecom service OnStar has never made a big dent despite its undoubted utility (and arresting radio commercials). And its first go-round with hybrids, a cheapo version called a mild hybrid that was installed in the Saturn Vue, has been widely panned as offering very little in the way of improvements beyond the conventional internal combustion engine. No, what Wagoner and GM need are a string of new models that are at worst competitive with the market and at best become benchmarks. Wagoner has high hopes for two of them. One is a seven-passenger crossover SUV that goes on sale in the next few weeks, first as the Saturn Outlook and then in GMC and Buick garb. Think of them as minivans without the sliding doors. Very functional and mildly stylish, they should sell well as long as gasoline prices don't shoot up again. The other one is the redesigned Chevy Malibu - a new look for one of GM's ugly ducklings. GM is especially proud of the interior, which is sleeker and more pulled together than in the past, and will reveal the exterior at the Detroit auto show in January. Whether the Malibu can drag buyers out of their Camrys, Accords and Altimas remains to be seen. At the end of the day, GM has to sell cars at a good profit to stay in business. Until it proves it can do that consistently, Wagoner's race is going to have a constantly moving finish line. |
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