Glenn Mercer

How I Plan to Trade My Depressed GM Stock

One more thing to think about. Yes, we all know "Product is king." Agreed. If GM can turn out great new product, a turnaround will ensue. But the question in my mind is, "How fast?" Consumers do NOT, when shopping for a car, write down all their options and then rank order them and buy whatever is in spot #1. Just like when, for example, you and the spouse choose a restaurant to dine at, you do not look up all eateries in a 10-mile radius and rank-order them. You choose from a pre-selected and proven list of familiar favorites. Same in cars. If X has owned three Hondas in a row and they were fine... and one hapless Pinto way back in college, X has precious little incentive to now consider Ford again. Over time, as they hear better and better things about Ford, see positive reviews, talk to a neighbor who owns one, they will re-consider the brand. But this takes time: years. J D Power reports that about 40% of the American public will not even CONSIDER a Detroit product. To drive consideration up, GM has been pulling out the stops: free over-the-weekend test ownerships, side-by-side comparos with Toyotas, contests for just stopping in the dealership, etc. These are all the exactly right things to do. The question is, will Detroit's cash run out before the consumer tide slowly, slowly turns? Remember, a car company's "conquest" vehicle is not this year's new car, it is the car they made 8 years ago, and consumers' memory of that vehicle. With the average age of a new car buyer at 45, most of us are buying used for years before we spring for the new beast, and so we are basing our choices on experience with Detroit's "bad old days," not today's great new products. Can Detroit change our minds fast enough?