Thursday, July 17, 2008

Get Your Free Gas While It Lasts

In 1952, GM honcho, Charlie Wilson, told congress, “What’s good for General Motors is what’s good for the country.” At the time when he said this, his company was already working to eliminate passenger-carrying competition from metropolitan transit systems by buying up the urban trolley companies and transferring the rolling assets to the scrap metal yards across America. Nobody at the time ever tried to explain how this was good for the country, and Wilson’s words were widely quoted and pretty much accepted at face value. Nobody today would buy it.

Yesterday, we saw further evidence of GM’s deterioration, as if any further evidence was needed. The once-proud company eliminated dividends for shareholders, and with GM stock value at an all-time low, this was the last nail in the coffin for the unfortunate people still holding equity investment in the company. Also announced yesterday was the discontinuation of healthcare coverage for GM retirees over 65. I guess Medicare is expected to take up the slack. And, of course, the current honchos will eliminate some white-collar jobs (other than their own) to make it look like management is sharing the pain. I’ll bet GM wishes it now had all that money they spent to dismantle the trolley systems half a century ago.

Less than a year ago, TV advertisements for humongous Chevy pickup trucks were featuring macho cowboy-types at the wheel as the Chevy was pitted against Ford F-Series machines and Dodge Hemis to compare pulling power. You don’t need to be an internal combustion scientist to know that something which can tow a locomotive eats up a lot of gas. So now, with fuel prices higher than ever, General Motors has excess numbers of pickup trucks sitting around with no buyers. Their solution to this is to offer free gas for a short period of time to new buyers—the automotive equivalent of a sub-prime ARM home mortgage. And sure enough, that same kind of cost-camouflaging flim-flam that blindsided financially naïve Americans into home foreclosure now has Chevrolet-owner-wannabes taking the bait. They still want to be that macho cowboy-type at the wheel, at least until the free gas runs out. This is what passes for wise consumerism and automotive industry sales management in the 21st century. It might be good for General Motors, but not for America.

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