Bumped from CNBC: I would have said …
February 15, 2007

That’s show biz! I was bumped from CNBC’s Money Talks segment today -- too much news happening to squeeze me in.

So here’s what I would have said if had I appeared and if I had been asked these made-up questions.

Interviewer: In which Big Three automaker would you invest now?

Krebs: I’d put my personal money on General Motors right now. I’m not alone. In a vote of confidence this week, Goldman Sachs raised its stake in GM, and Merrill Lynch raised GM’s rating to a “buy” from a “sell,” on the heels of some other firms boosting GM's rating as well.

Interviewer: Why GM?

Krebs: For starters, GM management appears to get it. For the first time in my GM coverage over 25 years, it looks like GM truly understands a company cannot cost-cut its way to prosperity. It’s the product stupid! GM has spent billions on new products - $4 billion on Cadillac alone - and has committed billions more to keep a steady stream of new models coming. Plus, the longer he’s in the job, the more impressive Chairman Rick Wagoner’s leadership is.

GM's strategy for tapping all of its global resources - such an obvious strategy - being put in place. And GM is having success in some important offshore markets, particularly China.

Interviewer: Talk more about GM’s products.

Krebs: Promising new products from GM are arriving in dealer showrooms as we speak with even more on the short-distant horizon. The new crossovers – the Saturn Outlook, Buick Enclave and GMC Acadia – are best in class.

The 2008 Chevrolet Malibu, in the all-important and very large midsize segment, looks to be a worthy contender to take on the competition, specifically Toyota Camry (although the Honda Accord coming out at the same time looks like a tough opponent). Cadillac has momentum. While the original CTS’s edgy styling drew attention to the brand, the new one may be more attractive to a wider audience, particularly with its inviting interior.

Interviewer: What about Saturn?

Krebs: Saturn is a story in and of itself. It has a completely new showroom of dazzling new models that come with Saturn’s well-established reputation for customer pampering. That now includes tests drives of vehicles delivered to your home or office. And there’s more to come, with the Saturn Astra looking like a contender among small cars.

Interviewer: What’s the downside for GM?

Krebs: GM faces formidable challenges. Fortunately, top leadership recognizes those challenges and is looking for solutions.

Most significant - GM faces a crisis of consumer perception. Its most daunting task is to get on the shopping lists of buyers. Memories are long, and people remember their problem-ridden GM cars of long ago - sometimes really long ago. Even more challenging is to convince young people - like my 15-year-old gearhead son ready to have his first wheels - that GM cars are cool.

On the cost side, GM is confronted with critical labor negotiations, perhaps the most critical in history.

And with a glimmer of hope here and there, complacency is a risk. GM cannot afford to make mistakes. It can’t afford a quality disaster. It can’t afford a product misstep – like the unsightly Pontiac Aztek. And it must follow through on promises for advanced fuel-efficient, emission-lowered technologies, like the innovative Chevrolet Volt plug-in hybrid concept it unveiled at the Detroit show.

Interviewer: Why isn’t Ford on your “buy” list?

Krebs: GM got a headstart on a recovery plan; Ford is in the throes of it. GM’s turnaround is based in product. Ford’s product plan needs serious work. Ford’s management team is unproven. Alan Mulally just came to Ford from Boeing last fall. His bench appears rather thin. Ford is in financial dire straits. It’s got lots of problems to tackle.

Interviewer: How about Chrysler?

Krebs: To buy into Chrysler, you have to buy stock in the German parent company, DaimlerChrysler. Too bad we didn’t buy yesterday. The stock shot up about $5 a share with the unveiling of Chrysler’s recovery plan and the news that DaimlerChrysler was willing to sell Chrysler. The Chrysler-DaimlerChrysler story is an unfolding one. My crystal ball isn't that clear.

Posted by Michelle Krebs at 7:36 AM under Companies | Comments (2) | digg this | Seed Newsvine