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General Motors

ounded in Flint, Michigan, in 1908, General Motors (GM) began as a holding company for Buick. In its first year the company acquired Oldsmobile, Cadillac, Elmore, and Oakland, the precursor to Pon-

tiac. In 1911, GM created General Motors Truck (later called GMC), and in 1918, the company acquired

Chevrolet and expanded into Canada. GM created General Motors Acceptance Company (GMAC) in 1919 to help consumers finance cars and trucks.
During the early years, GM expanded rapidly into other countries, including Germany, Australia, New Zealand, Japan, Great Britain, Egypt, and India. Beginning in the 1970s, GM again began adding automobile brands to its portfolio through acquisitions, joint ventures, or internal development, including Saturn, Hummer, Saab, and Daewoo. Over the years, GM has made acquisitions and developed new products and technologies in a wide variety of industries, including aerospace, national defense, refrigeration, computers, electronics, and earthmoving equipment. However, the company has divested most of its nonautomotive assets. The entire U.S. automobile industry suffered as a result of foreign competition during the second half of the last century. In particular, Japanese manufacturers like Toyota, Honda, and Nissan introduced high-quality automobiles that were smaller and more efficient at a time when fuel prices were increasing. Furthermore, high-wage union contracts put the U.S. manufactures at a cost disadvantage, in spite of high import tariffs on Japanese automobiles. Eventually foreign manufacturers began producing automobiles in the United States, further increasing their cost advantage. GM was very slow to respond to market shifts. The company found itself with a portfolio of cars that were expensive to build, less fuel efficient, and often of lower quality than competitors automobiles in the same segments. GM was in a poor position to weather the Great Recession. After losses of $38 billion in 2007 and $31 billion in 2008, GM undertook a major restructuring, supported by a massive government bailout that infused the company with sufficient funds to continue operations. GMs executives decided to focus primarily on core brands: Chevrolet, Buick, Cadillac, and GMC. Saturn, Saab, and Hummer were either sold or phased out. In addition, the company reduced the number of vehicle nameplates and reduced the size of its dealer network. Money was redirected into R&D and plant modernizations. Still struggling, GM filed for Chapter XI reorganization in June 2009. A newly formed company, NGMCO, bought the assets of GM and then changed the companys name to General Motors Company. The U.S. government provided over $30 billion in new funds and for its investment received a 60% ownership stake in the company. By 2010, the company was profitable again, and in November of that year, it raised $18.1 billion through an initial public offering (IPO). A huge earthquake in Japan in 2011 hurt the productive capacity of Toyota and other major competitors, putting General Motors Company in a strong position to absorb their lost sales. There is still some question as to whether the company will be able to continue its recent record of success.1