THE DECLINE

OF

GENERAL MOTORS
CORPORATIONS
PRESENTED BY:

JEHERUL ISLAM RAKESH BHUYAN DIPTY MARAK

ROLL NO: 01 ROLL NO: 61 ROLL NO: 62
 CONTENTS
 Introduction
 History
 Success Story
 Downfall
 Causes Of Downfall
 Conclusion

2
1 INTRODUCTION
  The General Motors Corporations was an American
multinational automotive manufacturing company
founded in the year 1908.

 It was the world’s largest motor-vehicle manufacturer

for much of the 20th and early 21st centuries.

 It operated in manufacturing and assembly plants and

distribution centers throughout the United States,
Canada, and many other countries.

 Headquarter – Detroit, Michigan, United States.

4
2 HISTORY
 In 1908, the General Motor

company was formed as

holding company by William

C. Durant, Frederic L.

Smith and Charles Stewart

Mott. William C. Durant

(1861 - 1947)
Charles S. Mott Frederic L. Smith
6 (1875-1973) (1870-1954)
 By 1910, GM bought Buick,
Oldsmobile, Cadillac, Oakland
(Pontiac) including other car
companies.

 1916- Reincorporated and

named as General Motors
Corporation (GMC) and
became a public company.

 1918- Chevrolet auto

7 company joined GMC.
  1931- World’s largest manufacturer of motor
vehicles.

 1953- Largest employer in the world.

 1955- Became first American corporation to pay

more than $1 billion in taxes.

8
  The 21st century tested GMC’s strength as the world’s
largest automaker and it was eventually dethroned by
Toyota in 2008.

 On June 1, 2009, the company declared bankruptcy

and it was one of the largest bankruptcy filing in US
history leading to the decline of the company.

9
3 SUCCESS STORY
 $120,00,000

ys
Da
12
STOCK OFFERING

$2000 – Working Capital

11
 World’s largest manufacturer of motor vehicles.

Surpassed Ford to become the leading

1931
American Passenger Car manufacturer
1929
1920
Buick’s Sales Doubled 36.8 % of US Market
Cadillac’s Tripled
1910
More than 20 companies added
1909
12 19 % of US Market
 60.00%
GM MARKET SHARE IN US (1910-1965)
55.00%
50.00%

40.00% 36.80%

30.00%

21.00%
20.00%

10.00%

0.00%
13 1910 1920 1930 1940 1950 1960 1965
 • Vauxhall
Motors
1925 Limited of
England.

GLOBAL • Adam Opel

EXPANSION 1929 of Germany.

• Holden of
1931 Australia.

14
 Electronic Data Hughes Aircraft
Systems Company

VENTURING INTO $ 2.5 $ 5.2

OTHER SECTORS
Billion Billion
1984 1986
15
 Largest Global Automaker
by annual vehicle sales for
77 consecutive years from
1931 to 2008

16
4 DOWNFALL
 48.3%

GM MARKET
SHARE IN US
(1960-2009)
19.5%

18
 OPERATING
MARGIN
(1959-2008)

19
 GMC Share Price FROM 2000 to 2009

$80.00
$72.69
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$3.20
$- Share Price

2000 2001 2002 2003 2004

20 2005 2006 2007 2008 2009
 DECLINE IN NET INCOME (1995 – 2008)
6.7 6
10 6.88
3.53

NET INCOME IN BILLION $

4.96 4.45
2.96 2.7
0.6 1.74
0
-1.98
-10
-10.4
-20

-30
-30.9
-40 -38.7

-50

1995 1996 1997 1998 1999 2000 2001

21
2002 2003 2004 2005 2006 2007 2008
 01 JUNE 2009

DEBT:
$ 172.81
Billion
GM
DECLARED
BANKRUPTCY
ASSET:
$ 82.29
Billion

22
5 CAUSES OF DOWNFALL
  High legacy labor and healthcare cost for its
employees.

$73 /
Hr
Labour cost / hr
$48 /
Hr

24
GM TOYOTA
  Lesser innovations to meet customers requirement.

 Inability to cut cost when sales were down.

 Poor design and inferior quality of cars compared to

its competitors.

25
  Adversarial relations with its blue-collar employees
and its suppliers.

20% 10%
Labour Cost
Purchased Parts
70% Others

COST COMPONENT
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  Misperceive the threat presented by its Japanese

Competitor for much of the 1970s & 1980s.

 Aggressive acquisition.

 Failure to adopt managerial practices of Japanese

Competitors.

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 COMPARISON OF PRODUCTIVITY
(GM vs TOYOTA, 1986)

GM TOYOTA
PARTICULARS
FRAMINGHAM TAKAOKA
Gross assembly hours per
40.7 18.0
car
Adjusted assembly hours
31 16
per car
Assembly defects per 100
130 45
cars
Assembly space per car
8.1 4.8
(square feet/year)
Inventories of parts
2 weeks 2 hours
(average)
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 MARKET
SHARE IN US
AUTOMOTIVE
GMC
INDUSTRY
TOYOTA
OVER TIME FORD
HONDA

29
6 CONCLUSION
  GM tasted success since it's inception. There were no threat as
such from competitors till 1970.

 However, Japanese automakers particularly Toyota, Honda

started taking the market share of GM since 1970s which GM
seemed to ignore because of their past success.

 GM failed to bring innovations to their vehicles when it was

required resulting in shifting of customers to its competitors.

 GM failed to understand the management style, strategies of

31 Japanese Automakers which proved them costly.

 Any questions
THANK YOU
?
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