Online Extra: 10 Turning Points for GM
1) December, 1991: Chief Executive Bob Stempel announces a massive downsizing, including closing 21 factories, just before the holidays. GM posts a record $4.5 billion loss for 1991. A year later, the board gives Stempel the boot amid persisting financial problems.
2) March, 1993: Just hours before CEO Jack Smith is to announce the promotion of purchasing czar Inaki Lopez to head GM's North American auto unit, Lopez sneaks away to join Volkswagen. Smith learns of the defection minutes before a scheduled press conference.
3) Late 1994: As productivity falls and auto operations bleed red ink, GM's stock sags. The revamped Chevy Cavalier compact car, built at GM's Lordstown (Ohio) plant, is the company's most recent -- and all-time worst -- vehicle launch.
4) May, 1995: Ronald L. Zarrella, whom GM hired in late 1994 from Bausch & Lomb as marketing chief, launches a disastrous brand-management strategy that justifies keeping all of GM's many models. The strategy sought to sell cars from GM's different divisions as if they were packaged goods, using marketing rather than vehicle attributes to differentiate like models in the GM family.
5) June-July, 1998: GM suffers a debilitating 54-day strike at two Flint (Mich.) parts plants that shuts the auto giant down. The strike costs GM $2 billion, embitters workers, and ripples across the U.S. economy.
6) January, 1999: Debut of the Pontiac Aztek, a minivan cum SUV, which overnight becomes synonymous with hideous design. GM execs apologize and make excuses for the vehicle months before it hits showrooms, despite it being the company's first attempt at the hot "crossover" market. Sales never come close to projections.
7) December, 2000: GM decides to kill off Oldsmobile in an effort to trim its stable of brands. Illustrating how hard it is for GM to shrink, the Oldsmobile axe ends up costing about $1 billion, after restructuring and dealer buyouts. GM also loses more than a point of market share as a result.
8) March, 2000: GM agrees to buy 20% of Fiat. The deal, which GM hopes will give it more heft in Europe, gives the Italian company the option of forcing GM to buy the rest of it after 2004. GM eventually takes a write-down on the failed investment and never attains the payoff it envisioned. Facing the possibility of having to absorb Fiat's heavy debt, GM in February, 2005, agrees to pay it $2 billion just to escape the deal.
9) September 19, 2001: To help jump-start the U.S. economy, GM launches 0% financing eight days after the terrorist attacks on New York and Washington. It was the right call at the time, providing a much-needed economic boost. GM's mistake was to stick with the program for years.
10) March, 2005: GM shocks Wall Street with the news that earnings are falling sharply, leaving its credit rating teetering on the edge of junk-bond status. A month later, it follows by announcing a $1.1 billion loss for the first quarter, and executives say they can no longer provide earnings guidance for the rest of the year. GM's reliance on SUVs and incentives to goose sales hasn't stopped its U.S. market share from sliding, to 25.6%.