GM CEO should use strategy similar to rival’s One Ford

Article by Anita Panait, on March 17, 2012

General Motors chief executive Daniel Akerson is advised to mimic the strategy used by his rival Alan Mulally of Ford Motor Co. in order to effectively turn around its money-bleeding Opel/Vauxhall unit and block the losing ways of its European operations, according to an Automotive News report. 

Although the recently signed agreement with money-losing PSA/Peugeot-Citroen may look like a feasible method to turn around its European operations, it seems that the tie-up is more beneficial to GM’s partner than to the company. Adopting a strategy similar to the “One Ford” setup may be more effective in turning around GM’s own European crisis.

Here are some reasons why. 1) Opel is part of GM’s worldwide portfolio of brands, which means the US automaker could sell the former’s vehicles anywhere in the world. About 87% of Opel’s 1.13 million global sales in 2011 was from Europe but GM could further expand the brand’s reach outside of the continent to boost sales in markets where consumer spending is higher. 2) Opel currently gets economy-of-scale benefits from sharing technologies and platforms with vehicles made by GM. The alliance may bring in more synergy, but the first fruit of GM’s partnership PSA is expected to ripen only in 2016 at the earliest. This synergy with PSA could really help Opel, but 2016 is still four years away – help will come too late as Opel needs to recover now.

 3) Although the PSA alliance would add volume to its European operations, GM may suffer from the increased complexity brought about by the partnership, cutting the speed of decision making at the US automaker. 4) The European alliance with PSA may end up like the previous agreements GM had with other Europe-based automakers. GM gave up on Saab in 2010, after around 20 years of trying to turn it around.

GM also had a bad experience with Fiat, as the former paid the latter $2 billion to avoid acquiring 80% of the Italian carmaker’s automotive unit. GM has spent a total of $4.4 million in Fiat, much less than it got from the five years of synergies. [source: Autonews]

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Topics: gm, ceo, rival

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