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Recall crisis: Time for GM to be sold?

By James Foxall, motoring journalist, Special to CNN
updated 5:21 AM EDT, Mon April 7, 2014
General Motors' CEO Mary Barra was questioned on Capitol Hill over the botched recall this week. The company have recalled<a href='http://money.cnn.com/2014/04/01/news/companies/barra-congress-testimony/index.html'> nearly 7 million vehicles so far this year</a>. Here is an overview of which cars have been affected so far. General Motors' CEO Mary Barra was questioned on Capitol Hill over the botched recall this week. The company have recalled nearly 7 million vehicles so far this year. Here is an overview of which cars have been affected so far.
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Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
Which cars are affected by the GM recall?
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STORY HIGHLIGHTS
  • James Foxall says General Motors has multiple problems and none of them is new
  • Lack of positive image and identity is one of them, he writes
  • General Motors could be run properly by a foreign company, James Foxall says

Editor's note: James Foxall is an award-winning motoring journalist based in the UK. He was motoring editor for the News of the World between 2004 and 2011 and is a regular contributor to Auto Express, CAR, Shell's V-zine and Diesel Car among others. The opinions expressed in this commentary are solely his.

(CNN) -- General Motors is under fire following its delayed decision to recall 2.6 million cars over a faulty ignition switch. The automotive giant's CEO says she is "deeply sorry" for 13 deaths caused by the defect.

In isolation that's bad enough.

But it's been exacerbated by another recall, this time of 1.3 million vehicles beset by a potentially dangerous power steering problem.

Critics might say it's hardly unexpected from a company that took a $49.5 billion U.S. Government bailout in 2008 and ended up costing the US tax payer $10.5 billion.

How did GM's Barra do in Senate hearing?
Recall means long-time GM brand damage
'I want justice': GM's recall hits home

Apologists claim that if General Motors had been allowed to wither and die, it would have cost the US in the region of $66 billion. Probably more important is the potential human toll -- an industrial apocalypse like this would have wreaked on GM's 212,000-strong global work force. Then there are the millions of employees working for the various suppliers who would also have suffered.

But was saving General Motors, and thereby condemning it to more of the same, really the triumph that some (mainly blinkered GM management) claimed?

In 2013, General Motors' global sales were up 4% compared with the previous year. That's in a market of worldwide vehicle sales that was up 7%. GM's big rival Ford's global sales increased by 12% over the same period.

General Motors has multiple problems and none of them is new. Lack of positive image and identity is one. Hear the words General and Motors together in the UK and it's usually because of mass redundancies or a factory being shut.

Of its brands, Vauxhalls are insipid and to sell in the required volumes they are heavily discounted and sold to rental firms, a killer for models' retained values that increasingly savvy consumers now consider.

Then there's Chevrolet. The decision to import the latest iterations of Camaros and Corvettes -- cars more worthy of the bowtie badge than the Sparks and Aveos we've currently got, coincided with a GM directive to withdraw Chevrolet from the UK by the end of 2015.

To calm a nervy dealer network, prices in January were slashed by up to 42%. You could buy a Chevy Captiva seven-seat SUV for £12,295 ($20,460), the sort of money that barely buys a decently equipped three-door Volkswagen Polo.

Unsurprisingly at that sort of money dealers haven't struggled. Chevrolet's February sales were up 114% proving what Korean firms have known all along: workmanlike products will sell if priced correctly.

Such business blunders abound. Twenty years ago, General Motors became the first major car manufacturer in the modern era to mass produce an electric car. It wanted to prove the viability of the project by inviting drivers to become one of 50 to lease the Impact electric vehicle.

The project leader anticipated 80 applicants. In Los Angeles there were 10,000. In New York 14,000. There was evidently an appetite for electric cars. GM shelved the Impact.

Management admits that now its zero and low emissions vehicle technologies have fallen behind rivals. Defeat from the jaws of victory and symptomatic of a company lacking the vision now required to compete at the cutting edge of car manufacturing.

GM used to own Swedish car firm Saab. In 2008 it finished development on the 9-4X, a competent SUV designed primarily for the US market. It was the sort of car that should turn a decent profit margin, perfect to help re-fill a cash-strapped company's depleted coffers.

GM didn't launch the car until 2011. Three years can be more than half a car's life: the 9-4X was past-it before anyone outside GM and Saab even drove it.

You can almost hear the mirth from boardrooms in Germany, Japan, Korea and even China. But could that be GM's salvation?

As a Brit who has watched an entire car industry slip into foreign hands I can tell you overseas ownership hasn't been too bad at making viable businesses out of MINI, Rolls-Royce, Jaguar, Land Rover and Bentley.

A fresh culture could be equally positive for GM. Successive American management teams have had their chance and at least 13 people have lost their lives. GM might be too big to die. It's not too big to be run properly by a foreign company.

Read more: The 57-cent part at the center of GM's recall crisis
Read more: 7 takeaways from GM recall hearing
Read more: GM stock is in the gutter. Time to buy?

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