Let’s not pretend the federal government’s massive bankruptcy bailout of General Motors is a big deal. Politicians have been always behaved like car salesmen – but as AOL’s Daily Finance points out, many times GM did not, which is why the company is melting like the Wicked Witch of the West in a rainstorm.
Yes, I understand the irony of quoting an AOL article about flawed business models, but it outlines very neatly the mistakes GM made in its corporate focus over the last few decades. As Toyota and foreign cars gained market share, GM essentially gave up trying to make money off cars and focused on making money off car loans. Instead of focusing on what made them successful, they ignored their bread and butter to chase profits in a department which they were less adept at – a surefire recipe for business failure. (It’s also the type of thinking that resulted in New Coke.)
It also serves as a cautionary tale. As reports surface that Chrysler, GM, and possibly Citigroup will all be government-owned, the question must be asked: how is an entity $11 trillion in debt in any position to help out a business which is suffering from years of flawed financial management? And even if they are a bunch of used car salesmen, what do they know about actually making the cars?