GM discounts, CEO comments raise eyebrows

Last fall, the road ahead looked smooth for General Motors.

Since it sank in Government guided bankruptcy, wiedereingestellt a leaner, meaner auto manufacturer over a year its shares on the world's major exchanges, again on the investment scene at the world's largest initial public offering burst.

But only four months later some industry watchers are fears that the company could draw new drivers, CEO Daniel Akerson, with the car market area is unfamiliar and GM into a ditch.

Critics claim that Akerson, a former telecommunications executive with pleasant subordinates of similar background, focus too much on cost reduce and heavily surrounded on incentives, such as such as discounts, artificially inflate sales at the expense of profits and brand image to leave is.

Adding to the worry: finance the departure this month of GM's Chief Chris Liddell after less than a year at work. Liddell ran GM through its record $23 billion IPO in November last year and his departure concerns about GM renewed stability and in the last few months behind the automaker put performance that many analysts have attributed to had. The company has four bosses in the past two years had.

"I have before this movie, and it ends badly," longtime Detroit Adam Peter Delorenzo said his blog, autoextremist.com.

Things have certainly optimistic considered for GM of the last time.

In the first months of 2011 sales of GM market share from its rivals packed cars and trucks, as the company increased according to sales data of j.d power and associates. It seems the rest of their investment in the company well for the future of the company, and hence the potential for U.S. taxpayer again bode.

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But some have called into question as these sales were made, and competitors have complained tactics of GM. You say, the use of sales incentives such as discounts access market a shortsighted tactic is disturbing their use that is industry now of a company under the direction of outsiders.

GM has strong incentives their cars since the beginning of the year, added great discounts offers for current owners of GM cars, no penalty early part-exchange for currently leased GM cars and larger discounts for users of the GM credit card. The result was a U.S. market share of more than 21 percent higher than the company has had in the year.

"We see upside to the incentives,", said Eric Lyman, Director of the residual value solutions in the automotive lease Guide, the industry authority on residual values.  "It is manipulating the market and lowering the cost of your vehicles, which lowers the resale value of your used vehicle on the market," he said.

This is the main concern of George Pipas, spokesman for sales analysis for Ford Motor Co. "The focus will be on the business rather than on the product" noticed he said "It clearly has adverse implications for resale value."

GM declined to respond directly, but text of a March 1 conference call with analysts by Don Johnson, Vice President of sales operations supplied. He was "price or incentives alone does not fully explain a 70 percent increase and a gain of almost three full share points,".

But the word in the industry is that sales fell in March after the incentives. "The metaphor that was used as drug addition,", Pipas said.  "If you move it sheetmetal depend on it is not so good."  "Then your customers hang it."

Some veterans ensure unfamiliarity with automotive engineering - he had to Akerson a long career as a Manager with Nextel and MCI--leads GM, error, that it made, when it was run from 1992 to 1995 by Chairman John Smale to repeat, formerly President and CEO of consumer products company Procter & gamble.

Smale's hand-picked North America President Ron Zarella the introduction of the Pontiac aztek, a dismal sales of SUV championed the styling of ridiculous it brought a quick end.

Akerson has appointed some top positions including the recent announcement that April 1 will take over as chief financial officer Dan, Ammann outsider in a similar way. Ammann came to GM of Morgan Stanley investment banking group. Akerson former Sprint Nextel has executive Linda Marshall, GM OnStar lead Division installed.

As GM's CEO, Smale was the conviction that GM just like P & G's consumer goods, and is largely could be sold cars with the differences in the packaging and marketing. The result was a product line of inconspicuous Autos--the aztek ungeachtet-- drains both costs and customer appeal.

In an echo of the past, Akerson recently said the Wall Street Journal was that a GM as the can of diet Coke was during the interview as well drink car.

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"It is a consumer product," he said. "GM is acting like a consumer-oriented, not engineering driven company start." "We sell a consumer product - our can cost only $30,000"

Industry insiders with a memory of the 90s years blasted immediately this view as a return to Smale's strategy failed, cultivate a product commoditize is important for a strong emotional connection to the drive sales and brand loyalty.

"The only difference between GM then and now GM is that this is a a company that has emerged only recently from the brink of bankruptcy, the bad-a single misstep can afford over brought from misguided leadership, even though she has the most competitive lineup (the vehicles) it had in decades" Delorenzo said.

At the time of his departure from the company last year, former Vice President of product development reminds boss Bob Lutz the mess which he found after joining GM in 2001:

"Product development all organisational with brand management was in," he said. "This was done Smale, John, who believed that you could use the principles of the Division of consumer products in the automotive business, which has sought, and it simply doesn't work."

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Focus on costs and speed product development rather than on product quality and customer satisfaction has led cars, no one wanted, Lutz said.

Under Lutz, GM won numerous awards car as the North American car of the year for Saturn Aura and Chevrolet Malibu, Chevrolet Volt, while cars like the Cadillac CTS, Chevrolet Corvette and Buick LaCrosse won applause from magazine reviewers.

In addition said transaction prices-the actual selling price of GM car and truck-increased from $4,000 as a result of an additional $1,000 of the cost, Lutz, so that customers happier and the company more profitable.

Now Akerson says that speed and cost are the aspects on which he will focus the magazine to say that "while the second WELTKRIEGS GM produced tanks and equipment for four years." "Why should it take four years to a car?"

Reuters contributed to this report.