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Letter To Steve Rattner on Ousting GM's CEO Richard Wagoner--Look to India's Nano Car For Paradigm Change

I??e know Steve Rattner for decades, from his early days at The New York Times through his years as an investment banker specializing in media mergers, his participation in the Council on Foreign Relations and now as President Obama?? ??ar Czar.?He wasn’t the obvious choice for that job but he is a tremendously fast learner—and perhaps more important—a fast and tough decision-maker. Bouncing GM’s CEO Wagoner and most of the board before pouring more taxpayer money into GM is a smart and necessary move. Those folks have been around for nearly a decade—through the entire long decline of GM.

But what now? What should GM do?

Steve, here’s my advice to you from outside the Beltway and outside Detroit. Tata Motors has just launched an entirely new car, the Nano—with an entirely new car platform—in the middle of a huge global recession. In redesigning GM, look to the Nano for inspiration.

Steve, the US auto industry needs to do a lot more than just make hybrid cars to survive and prosper. Every car maker in the world is making hybrids. GM just can’t catch up. It must leapfrog ahead.

You, Washington and Detroit should rethink how cars are made, how they are assembled and how they are sold. What is the point of tens of thousands of dealerships when people can go online and design their own cars off basic platforms? What is the point of big assembly plants when you can make cars as kits and have them assembled in local garages (as the Nano does). Why mass produce cars when the market is fragmented into hundreds of micro-markets, each with its own price point and design culture? Why design anything in Detroit, when cultural trends develop outside that city? Tata understands and empathizes with its consumers—families of four or five riding on a single motorcycle wanting a small, inexpensive car for $2500. Detroit has been out of touch with Americans for decades.

Steve, these questions go beyond the conventional framework you are working within—union rules, management salaries, give-backs, bond-holders, CEO leadership and government financial help. But unless you go beyond convention and enter the design paradigm of redesigning the car process itself, Detroit won’t ever become a global leader again.

See you at the Council.


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