GM: Titanic Of Brands

The collapse of GM and the problems they face going into bankruptcy cannot be overstated. It is amazing how a company that was once the cornerstone of American industry could decline unimpeded over such a long time without any solution being adequate to the task of saving the company.

The scale of the decline can be examined in the brand equity dollar value of the corporate brand (the portion of market cap attributable to the GM name):

2003
General Motors $4.86 Billion
Toyota $19.05 Billion
Industry Average $6.19 Billion

2008
General Motors $0.32 Billion
Toyota $21.85 Billion
Industry Average $5.43 Billion
Source: CoreBrand’s Directory of Brand Equity

The squandering of brand equity at the corporate level is just the tip of the iceberg. The collapse of individual product brands despite recent improvements in product quality proves the dysfunctional quality of GM management.

GM management may have deserved to be fired, but I strongly believe it should have been at the hands of shareholders and the board of directors. Unfortunately, it will be the shareholders and bondholders
who will now pay the ultimate price in the bankruptcy proceedings.

How will GM position itself now that those remaining loyalists to the corporate brand have been forsaken? Will the new General Motors brand emerge stronger? Will President Obama need to become a spokesperson for GM, producing a Lee Iacocca style advertising campaign, “If you can find a better car company, buy it.”

The question yet to be answered will the government and unions be able to run the company better than the management? Quite possibly, because this time the government and the unions might be able to see the problems that the old GM leadership has understood for decades and been handcuffed to resolve. US carmakers are strapped with expenses, healthcare and legacy costs that their foreign counterparts are not. GM, Ford and Chrysler have not been able to compete effectively. Only the unions and the government working in cooperation with a new management team can level this playing field giving GM a better chance for survival. OK – bring in the bulldozers.

Contributed by: James Gregory, CEO, CoreBrand

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