As General Motors approaches its 100th birthday, they may want to consider a birthday cake without candles-GM blew it on the development of hybrids, and blowing out 100 candles might serve as a sobering reminder of the company's dwindling 25-percent share of the automobile market.
GM announced this slip in market share on April 19, down from 34 percent in 1992, and posted a first-quarter net loss of $1.10 billion, its worst outcome since that year. On the same day, hybrid producer Toyota claimed a best-ever first quarter, up 10.6 percent since the same period last year. If GM hopes to maintain market supremacy it must follow the lead of foreign producers and shift its production away from gas-guzzling vehicles toward profitable, fuel-efficient cars.
Market analysts blame GM's downfall on burdensome costs of employee health care, expensive raw materials and weak domestic sales, but GM's shortsighted devotion to developing gas-guzzling vehicles ultimately spells doom for the company in the face of the energy crisis.
By marketing extremely energy- inefficient vehicles and ignoring the growing consumer preference of fuel-efficient cars, GM inadvertently invited foreign producers of hybrids to take a larger slice of the automobile market. If GM hopes to maintain market dominance, it must reconcile with the damaging effects of rising oil prices on consumers and shift investment toward cost-effective hybrids.
Diversification of color and brand empowered GM to wrest market control from Henry Ford in the early 19th century, but this form of product variation deserves re-evaluation in light of the 21st century's oil predicament. GM has forsaken its capability to lead the automobile industry in the development of cars with high fuel economy. Instead, it has exacerbated its financial woes by limiting production to vehicles with outmoded energy technology.
Now, the energy-efficient hybrids produced by foreign companies have a technological edge with consumers. As hybrids evolve into vehicles with comparable handling and performance to their gas-reliant predecessors, GM must reassess its current diversification strategy or face continually disappointing market outcomes.
During the Clinton administration, the government offered the big three automakers, Daimler-Chrysler, Ford and General Motors, incentives to develop energy-efficient cars, but the carmakers arrogantly ignored efficient solutions and developed even larger and thirstier automobiles. Seemingly, GM missed the memo that oil is neither plentiful nor cheap in 2003 when it introduced the 10-mpg Hummer.
Threatened by foreign success with hybrids, GM has finally found the incentive to invest in hybrid cars, due out nationwide in 2006. However, this commitment will cause further financial woes to the company if it attempts to enter a new realm of production without discontinuing any of its existing brands.
Fortunately for those Americans who define their patriotism by their extended-cab full-size pickups, GM plans to introduce \mild- hybrid"" versions of their Silverado and Sierra models as well as their SUVs. Yet, I doubt that pickup owners would revel at having the word ""mild"" attached to their rugged vehicles. GM's hybrid models are too little, too late and too huge-making ""mild hybrid"" pickups and SUVs does little to minimize the burden of gas prices faced by consumers and the initial cost of the vehicles exceeds that of their non-hybrid counterparts.
As GM approaches its centennial, I have some advice for the party arrangements: Definitely skip the candles and invite a few hybrid engineers to the celebration. Foreign producers have gradually earned larger slices of the automobile market pie, and if GM fails to genuinely invest in hybrid development, foreign producers may take the birthday cake, too.
opinion@dailycardinal.com.
