GM Needs a Lot More Than Just First Aid

General Motors escaped complete collapse, but it’s not out of the woods yet. In the United States, GM is wedged between the German luxury car manufacturers and the cheap suppliers in the Far East.

At GM, everything is super-sized: Its mountain of debt was huge, as was the number of factories and employees no one seemed to need any longer, and the cars they produce are still enormous. And the initial public offering (IPO) of its stock will likewise be gigantic. The stock issue Opel’s parent company is preparing will likely be one of the largest in economic history — but it’s unlikely to be the huge success GM is hoping for. It’s too early to bring that act onto the dance floor just yet.

There’s no question that GM put its bankruptcy problems behind it with breathtaking speed and enacted painful but long overdue cuts. Between 2007 and last year, nearly one-quarter of all jobs at GM disappeared and a good dozen of its large factories were shut down. Its mountain of debt was gotten rid of thanks to Chapter 11 proceedings, albeit at the expense of its shareholders.

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They’re on the right track as far as expenses are concerned, and the confusion of too many brands has also been addressed. Money sponges like Saturn and Pontiac are history, and the premium manufacturer Saab, for which GM never seemed to have a knack, was sold off. GM also seems well positioned regarding the two largest car markets in the world, the USA and China.

But is all this just a fairy tale designed to convince potential investors to pour billions of dollars into GM’s coffers? Probably not. GM’s management thus far has only rendered first aid. Their actions amount to little more than a band-aid. For the lasting cure of permanent success, GM needs more.