GM's Shareholders, Not Just Government, Should Be Calling For Barra's Head

Japanese sedans simply deliver more value, reliability and verve, and don't think for a moment the problem does not repeat where car buyers are heading.

The three best-selling vehicles in America are still U.S. pickup trucks - the Ford F-150, Chevy Silverado and the Dodge Ram - but those are followed by Japanese SUVs - the Nissan Rogue, Toyota RAV4 and the Honda CR-V.

Ford and Chrysler already announced they are effectively pulling out of the sedan market and with GM's exit, Asian auto makers and Volkswagen will have a clear path to most of the remaining 5 million sedans sold here. And those are often the first cars young folks own and a gateway for manufacturers to hawk their SUVs as careers mature and incomes rise.

The U.S. tariff on sedans is only 2.5% but SUVs and trucks benefit from a 25% levy.

When announcing the recent jobs cuts, GM carped that the recent steel tariff was costing it about $1 billion, but I did not hear Barra offer to give up her truck/SUV tariff if the steel duty were dropped - that's the hypocrisy of Detroit.

It's going to get worse - a lot worse.

Barra is betting that electric vehicles and autonomous drive are coming fast, but GM has been late to the party with just about every major innovation that instigated change in what Americans buy since the 1970s. Chrysler pioneered the minivan and SUV, and Honda, Toyota and Nissan were first with contemporary front wheel drive, hybrid and all-electric vehicles.

GM's most basic problem is a culture of mediocrity among its top managers and the difficulties of competitively producing vehicles in United Auto Workers organized plants. It is important to remember Japanese competitors make sedans in the United States profitably without a unionized workforce.

Whereas the Japanese aim to make best in class vehicles, GM executives are happy to settle for good enough. For a long time now, good enough has been not enough, and the matron of this culture of failure, Barra, should be shown the door.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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