Saturday, July 15, 2006

If Detroit's clueless, why is GM in play?

Monday, July 10, 2006
Daniel Howes
If Detroit's clueless, why is GM in play?

Don't know what's worse -- seeing the French and Japanese poised to allegedly come to the rescue of General Motors Corp., if shareholder Kirk Kerkorian gets his way.

Or witnessing hard evidence -- in the form of the Chrysler Group's new "Ask Dr. Z." ad campaign -- that one of Detroit's own thinks it's good business to emphasize the German-ness of their vehicles because being from Motown is bad for their image.

Or hearing serious talk, as I have, that Audi of America Inc.'s minders back in Germany are pushing the power structure in Auburn Hills to get on with plans to bolt Michigan for new digs on the East Coast.

They figure being lumped in with the sad-sacks here isn't good for their image (as if Audi customers in New Jersey or California know or care where the U.S. sales boss sits). Plus, the German bosses would prefer doing Manhattan quarterly than suffering at the Somerset Collection.

Bottom line: A not insignificant chunk of the global automotive world has come to the conclusion -- more by what they're doing than saying -- that Detroit's Big Two are either a) kryptonite for their business or b) an enormous opportunity to be had cheaply.

Who's right?

Despite an eight-year tie-up with Chrysler Corp, DaimlerChrysler AG Chairman Dieter Zetsche's stint running it and the fact that Chrysler has been arguably the brightest spot in their universe the past few years, DCX execs figure it's wiser to remind American buyers there's a Mercedes-Benz suspension in their Chrysler than embrace their American-ness.

It may be honest, but what's next? Perhaps appealing to Asian-American buyers by touting the Chinese parts in a Jeep or trying to woo Hispanics with pickups built in Saltillo, Mexico.

So why, then, are Renault SA of France and Nissan Motor Co. of Japan willing to follow the lead of their fearless leader, Carlos Ghosn, and begin alliance talks with GM if Detroit Auto (of which GM is the largest chunk) is such a hopelessly unfixable morass?

Answer: Because it isn't.

A surprising by-product of Kerkorian's bid to push GM into the loving arms of Renault-Nissan -- or at least install Ghosn atop the RenCen -- is that some of GM's fiercest critics, the folks who drove its stock down and trashed its bond ratings, are now giving GM credit for delivering.

Bet Kerkorian and his sidekick, GM director Jerry York, didn't think the prevailing reaction to their Nobody-but-Carlos gambit would be to force a qualified rally around GM exercise. Worse, for them, the outpouring effectively gives GM's brass credit for realizing big chunks of York's vision for GM, detailed in a January speech.

Shared sacrifice with the unions? Done -- health care and buyouts. Executive pay cuts and salaried benefits reductions? Done. Plant closings? Done.

Which may explain why all this may be coming right now. Either York, an insider, knows something the rest of us don't. Or GM's turnaround is getting enough traction to make it tougher to build a boardroom case against Chairman Rick Wagoner.

We'll see which it is.

Daniel Howes' column appears Mondays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or

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