Is ‘The General’ on the Move?

Economically speaking, you could call this the winter of our discontent, especially if you’re a Detroit automaker. Yearly sales are down, and 2008 is looking worse. It’s hard for Americans to dream about a new car when they’re struggling to make the mortgage payment.

After chipping away at Motown’s foundation business for four decades, import automakers in 2007 sold nearly half the new cars in the U.S., their highest share in history. For Toyota, it was business as usual — another year, another step toward world domination.

But one Detroit carmaker can see some bright spots through the blizzard of bad news: General Motors. What’s that, you say? Is this the same GM that lost a net $10 billion in 2005, and $2 billion more last year? Yep, that’s them.

From the way they design and build cars, to the way they run their global business, GM is making the necessary moves to ensure its survival — maybe even its long-term success. Those moves may also give GM a competitive edge against its hometown rivals Ford and Chrysler.

GM has been steadily shoring up its financial house, including a $30-billion primer to start a voluntary employee benefit plan (think of it as a massive IRA), that will leave retirees largely responsible for their own health care. This allows GM to largely shed the benefit burden that was killing it versus foreign rivals, whose governments generously pick up the tab for employees’ medical bills.

GM was spending more than $1,500 on employee health care for every car and truck it makes, compared to $300 for Toyota. It’s hard enough to compete against the Japanese juggernaut without such a back-breaking cost disadvantage.

But as ever, the only thing that really sparks and sustains a turnaround is the product. And in recent months, GM has delivered three new models that constitute a serious winning streak (actually five, but I’m counting its largely similar crossover SUVs from Saturn, GMC and Buick as one).

First is the Cadillac CTS sport sedan. This past summer I tested the CTS at Germany’s legendary Nürburgring race and development track, where virtually every top German model goes to earn its wings. Later, on a no-limit stretch of the Autobahn, I zinged the Caddy to a steady 130-mph cruise without it breaking a sweat.

The CTS was impressive for more than its gutsy looks and handling. The new interior is genuinely luxurious, miles better than the bargain-bin look of the previous version. The Caddy isn’t perfect, but it is a deserving winner of Motor Trend’s Car of the Year award.

GM’s company-wide effort to improve interior design — long a sore spot with critics and consumers — also shows up in the new Chevrolet Malibu. It’s quite simply the best GM family sedan in decades, a straight-up competitor to the Honda Accord. In fact, "the General" had four models among six finalists (four of six!) for the prestigious North American Car/Truck of the Year awards in Detroit. Guess who came out on top in the car segment — the Chevy Malibu.

Another of those finalists was the Buick Enclave, the most deluxe version of GM’s hot new crossover SUVs, including the GMC Acadia and Saturn Outlook. And where Buick has long struggled to draw new buyers — especially folks who don’t remember the Eisenhower years — fully 45 percent of Enclave buyers are new to GM.

Let’s not forget the redesigned Chevy Silverado and GMC Sierra pickups, GM’s bread-and-butter profit machines that have been widely acclaimed. And this isn’t about cheerleading for GM. I’ve long documented the company’s missteps and product misfires. The company still faces enormous challenges, not the least of which is its ever-dwindling market share.

Frederick "Fritz" Henderson, GM’s chief financial officer, told me at the company’s annual holiday party in New York that GM is pleased with its recent run. But the company isn’t ready to start popping the champagne at its downtown Detroit headquarters. "Job not done," Henderson tersely summed up. "Job part done."

As Henderson noted, huge critical acclaim and huge sales aren’t the same thing. Let’s not forget that 2007’s North American Car of the Year, the Saturn Aura, has been a sales disappointment so far. And there are plenty of Lexus, BMW and Mercedes owners who won’t look twice at a Cadillac, no matter how good it is.

Same for the Malibu. When you’ve owned a half-dozen Accords or Toyota Camrys, and you’re perfectly satisfied, it’s that much harder for Chevy to convince you to give them a look. GM is still struggling to shed the baggage they piled up for decades, and its reputation will take years of great cars to rebuild.

For GM’s public image, the real make-or-break project may be the Chevy Volt, the plug-in hybrid that it plans to bring to market after 2011. That car has raised the hopes of every greenie and anti-GM meanie on the planet. If GM can make the technology work, it could steal the environmental spotlight from Toyota — and convince even non-hybrid buyers that the General is on the move