GM’s Latest Reorganization Is the News of the Year
I drove what is arguably General Motors’ best modern model to the airport on my way to the 2019 Ford Ranger media drive in La Jolla, California. It was a blue Cadillac ATS-V coupe with a six-speed manual gearbox and fitted with winter tires for December in Southeast Michigan.
The contrast in my back-to-back drives couldn’t be a more fitting metaphor for how the U.S. auto industry is changing. One is among the best BMW M4 alternatives on the market, and it’s about to be replaced with a new model that probably won’t have a V performance variant, and almost certainly won’t have a manual-transmission option. The other is a brand-new model that immediately rises to one of the best two in its segment and builds on Ford’s dominance in the truck business, though there’s nothing fun about the way it drives. My favorite feature of the Ford Ranger pickup truck—any midsize truck, actually—is that you can haul far more interesting conveyances in the bed.
GM’s recently announced restructuring, which includes the surprising cut of the Cadillac CT6 and Chevrolet Volt, is the biggest automotive story of 2018 in my opinion. Not because GM hasn’t reorganized before. I’d guess this is maybe the fifth or sixth in this millennium, including the 2009 bankruptcy and attendant federal government bailout. With this latest reorg, GM will close plants and lay off about 15 percent of its salaried workforce. Blue-collar workers will be given the chance to transfer to still-active plants, though the automaker on December 20 said it would even cut 50 of 116 workers at its Brownstown Township, Michigan, lithium-ion battery-pack assembly plant even as the automaker plans 20 new fully electric vehicles by 2023.
If GM were to close its Mexican plants to move production north, it wouldn’t save all these plants and their employees in the long run. When CEO Mary Barra announced the cuts in November, U.S. auto production capacity was underutilized by roughly 3 million units, about half of that attributed to GM plants. It’s not going to get easier, because no analyst expects the U.S. market to reach, or breach, the 2016 and ’17 levels of 17.5 million units per year sales any time soon. If you look at the historical sales numbers, we’re likely to settle in somewhere in the mid teens, 15 million or so, for the next few years, and that’s not accounting for the next recession, whenever that happens, nor for the profound changes in the automotive market that several of us expect over the next decade.
Modern full-line automakers will continue to boost the levels of automation in vehicle assembly over the next decade. If the car and truck ownership paradigm shifts even marginally away from full ownership, they’ll sell fewer and fewer vehicles, so no one should count on a future of automotive manufacture providing steady, high-paying jobs unless they live in China or an emerging market like India or Vietnam.
It’s going to be nearly as tough for all of today’s dozen or so major automakers to survive this shift without serious consolidation or collaboration. Ford Motor, which wants to be known not as a car company but a mobility company, and Volkswagen Group are expected to announce some sort of hookup beginning with joint-venture European commercial trucks any day now. Automotive News recently reported that Mercedes-Benz parent Daimler AG is in talks with archrival BMW Group to develop “key automotive components” together.
Barra’s reorganization is GM’s attempt to accelerate the company’s slow, deliberate march toward autonomous electric vehicles. The resulting amorphous crossover-like vehicles will make the perfect modern urban commuter modules, especially as major cities look for a cure for carbon emissions and severe traffic congestion.
For many years between now and when autonomous EVs become dominant, the moneymakers that will finance the new product development will be gas-hybrid powered crossover vehicles and traditional pickup trucks. The pickups already are the vehicles of choice in rural areas, while compact and midsize CUVs serve as the perfect ride-sharing and -hailing vehicles, with their easy step-in height, adequate luggage space for airport pickups, and pretty good fuel mileage.
Eventually, autonomous EVs will take over everywhere. The timing depends on how quickly political winds shift to recognizing climate change as a crisis for which we have run out of time. This is the ostensible reason that Wall Street and Silicon Valley believe Tesla to be the only automaker perfectly poised for the future.
This model of autonomous EVs cycling through three or more commuter users per day in major cities will not solve the problem of congestion on the streets, just as Elon Musk’s Boring Company subway tunnel isn’t terribly efficient if it uses Tesla vehicles and not trains as subway cars, as was demonstrated.
The problem here is a commuter variation of “not in my back yard.” Too many middle-class commuters would rather sit in soul-sucking traffic congestion than share a bus or metro train with the Great Unwashed.
It might seem antithetical for a car-magazine staffer to suggest the advantages of expanding mass transit compared to transporting every commuter in an autonomous EV, but I see the potential for an enthusiast’s sweet spot before we turn over all our roads to driverless crossover vehicles—a time in the near future when twisty, out-of-the-way two-lanes will be full of nothing but the few remaining non-autonomous models from automakers that specialize in sports cars. Perhaps by then GM will even re-introduce something like the manual-transmission Cadillac ATS-V.