Insider's Book Reveals Factors Leading to Crumbling of GM's Empire

MIAMI (Aug. 30, 2007) - When General Motors' (GM's) empire started to crumble beginning in the mid-1980s, automotive expert Bob Horvath was hardly surprised. "In fact, Detroit's Big Three forgot how to satisfy customers and dealers back in the '80s," says Horvath, a 40-year GM veteran, who details one of the carmaker's notable missteps in "Project 2000: The Rise and Fall of Oldsmobile." Horvath notes that in the mid-'80s, when GM had Oldsmobile, its world market share was 54 percent. In 2007, it has declined to 13 percent.

According to Horvath, the key to success in the car industry is simple: Keep customers happy by giving them the products they want, and keep your dealers happy too. Horvath says GM forgot about all that and squandered its market dominance in the process. "GM's attitude and regime change in the mid-'80s allowed Japan to make significant inroads in the U.S. and worldwide auto industry," Horvath explains. He believes its failure to recognize consumer demand for a Toyota Camry-type or Honda Accord-type car, and failure to compete in this market, in part has led to Toyota becoming the world's No. 1 auto manufacturer through June 2007, ending GM's 76-year reign as the world's best-selling automaker.

In his book, Horvath points to two factors central to the GM decline. One key element in GM's demise was the closing of the Oldsmobile Division. From 1970 to 1985, he notes, the Olds Cutlass was the No. 1 selling car in America, and Oldsmobile was the most sought-after franchise in the world. "Oldsmobile went from best to worst in 20 years, and became a dinosaur in October 2005," says Horvath.

Horvath said another key element contributing to GM's declining share was a secret project that GM called "Project 2000," a plan he had a part in implementing. This corporate strategy, Horvath says, called for the systematic elimination of dealers to take place by the year 2000. While this benefited GM's upper management, it was at the expense of the dealerships. 

(Source: Robert Horvath)