Saturday, August 02, 2008

Build It and They Will Come

Naturally, McArdle argues in favor of management over unions; or rather, she argues that unions are more to blame for GM's profit losses. Of course, this misses the point of GM's declining sales entirely. If you look at their line of cars there are few that compel you to buy them. And it's management that makes the decisions to produce a certain number of a type of vehicle. So if GM is sitting on a stock of unsold SUVs and trucks due to their low gas mileage then that's really management's fault, not the fault of the unions. Producing a bunch of bland sedans while maintaining their focus on SUVs and light trucks wasn't a decision the unions made. It was management's responsibility to approve car designs that would appeal to consumers, of which they haven't. Which is why European, Japanese and Korean imports are slamming them in competition.
When I bought my first car (a 2004 Audi A4) it was initially based on the stylings. That's what GM has forgotten about. If you make a sedan that turns heads on the street then you'll more than likely sell a number of those cars. It's really basic economics here. Come up with a compelling sedan design and watch the sales roll in. But if all you have are cars that look like cheap Asian knock-offs people are typically going to buy the real thing versus some fakery. It isn't about union versus management. It's about management actually doing a good job in offering cars people want to buy.