Vehicle Designs Good and Bad for GM, Competitors
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It's obvious that General Motors (NYSE: GM) management is unhappy with its vehicle design process; the company has appointed Andrew Smith as new lead designer. The company is also reportedly planning to give more autonomy and authority to ten advanced design centers throughout the world.
This means that GM does not like the results it is getting from its current design process. The main reason why a car manufacturer would be unhappy with a design process is obvious: The cars are not selling. GM bosses would not go through such an expensive shakeup unless they thought their market share was threatened.
The Detroit Free Press newspaper reported that GM elevated Ken Parkinson to executive director of design for the GMC and Chevrolet brands. The company will also move Mark Adams, the design and brand champion for Opal and Vauxhall, back to Detroit. He will serve as the executive director of Cadillac and Buick design. David Lyon was appointed Vice President in charge of GM Europe design. Lyon will move to Russelheim, Germany, where he will presumably try to improve Opel's design.
Such drastic management changes could certainly hurt its stock value; they indicate that even the company's own executives are unsure about design and corporate direction. Unfortunately, the newspaper did not say why GM management is so upset with its current designs. It simply stated that a shakeup is in progress. Part of the reason for the shakeup could be GM's dismal sales in Europe. GM's share of the German auto market has reportedly dropped to 5%.
Toyota and GM Vehicles Being Investigated for Fire Dangers
A design issue of an even greater magnitude is threatening GM competitor Toyota (NYSE: TM). The company could be facing another massive recall that could seriously damage its stock value. The Associated Press has reported that the National Highway Traffic Safety Administration (NHTSA) is investigating possible safety issues in up to 1.4 million cars.
The issue is that faulty wiring in doors can cause fires. The AP reported that 161 reports of such fires have been received and nine people have been hurt. The current investigation is centered on a power window switch in the driver's side door. Affected vehicles are 2008 and 2009 Camry, 2007 RAV4 SUVs, 2008 Hybrid SUVS and some 2007 to 2009 models of the Yaris.
No Toyota models currently in production seem to be affected, but the investigation does center on Toyota's flagship, the Camry. A major recall and the resulting publicity would definitely hurt Toyota's reputation and market share. It could also hurt Toyota's stock value.
Toyota's reputation for quality and sales were hurt badly in 2011 when 14 million cars worldwide were affected by a recall. The current complaints seem to indicate that Toyota could still face quality problems and potential losses. So far there has been no recall yet. Instead, the NHTSA is conducting an engineering analysis, which will determine whether any models are taken off the market.
Toyota is not the only company affected by this problem. Similar fires have been reported in the Chevy Trailblazer, Buick Rainier and GMC Envoy lines. It is not clear what action the NHTSA will take concerning the GM vehicles.
The big winners from another major recall would clearly be Volkswagen and Honda. Volkswagen would be well positioned to take Toyota's market share with its popular Jetta sedan. Honda could also see gains for its flagship Civic sedan.
GM Applies for Electra Trademark
In the midst of these design troubles, GM has applied for a trademark on the name Electra. The Hybrid Cars website speculated that the company could be planning to use the name for a hybrid or electric Buick. It could also be planning to bring back the Buick Electra, one of its flagship sedans made from 1959 to 1990. This could give GM a much needed boost.
Ford, Chrysler and GM have had quite a bit of success in reviving older models in recent years. Ford has had a lot of success with its Mustang (bringing it back with the Mustang Boss 302), while GM has successfully revived the Camaro.
If GM can integrate its past successes with today's demand for hybrid and electric cars, I think it will be in a dominant position going forward. GM is arguably one of the most recognized car brands in the world, and giving consumers a fresh, modernized version of an old classic will have a positive impact on the company's bottom line, which will positively impact the stock. Additionally, GM's appointment of Andrew Smith as lead designer shows that the company is serious about changing its designs up to meet the demands of consumers.
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