Recall crisis: Time for GM to be sold?

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

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.

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.

How did GM's Barra do in Senate hearing?
How did GM's Barra do in Senate hearing?

    JUST WATCHED

    How did GM's Barra do in Senate hearing?

MUST WATCH

How did GM's Barra do in Senate hearing? 04:22
PLAY VIDEO
Recall means long-time GM brand damage
Recall means long-time GM brand damage

    JUST WATCHED

    Recall means long-time GM brand damage

MUST WATCH

Recall means long-time GM brand damage 04:24
PLAY VIDEO
'I want justice': GM's recall hits home
'I want justice': GM's recall hits home

    JUST WATCHED

    'I want justice': GM's recall hits home

MUST WATCH

'I want justice': GM's recall hits home 01:39
PLAY VIDEO

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?

        CNN Business

      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Why are Iraq oil markets stable?

        Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
      • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

        Ebola's economic 'scare factor'

        The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
      • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

        Casinos beat the banker

        Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
      • spc marketplace middle east ata atmar a_00010015.jpg

        Bateel's new bakery venture

        Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
      • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

        Is this the real new black?

        A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
      • Move over Siri, here comes Jibo

        Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
      • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

        Jordan: Seeking calm in chaos

        Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
      • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

        Forget 3D, it's 4K now

        At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Where is Iraq's oil?

        Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
      • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

        Why Europe needs Russian gas

        The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.