GM's Bankruptcy Foreshadows a Smaller, Greener Company

The Chevy Spark: Downsizing the bowtie. (General Motors photo)

It's kind of scary to think of a bankrupt General Motors, and the biggest reason doesn't have much to do with cars. A bankrupt GM will make an economic recovery much more difficult, because the company is shedding workers and plants: by the end of next year, it will have closed 13 factories. In the 1980s, a resurgent Detroit led the recovery.

The new GM won't look much like the old one. It's impossible to overstate how slow-moving and bureaucratic the company was at its height. Turning it around was like reversing course on The Titanic, and we all know how that ended up. GM did start the reinvention process — the Chevrolet Volt was part of that — but it was too little, too late. The green cars were still hiding a core made up of big SUVs and Hummers nobody wanted anymore.

I do think some form of GM will ultimately survive the bankruptcy process, go back into the private sector (it's currently 60% owned by you and me) and get competitive again. But its vehicles will be considerably downsized. GM will no longer include Hummer, Pontiac or even Saturn (a noble experiment that got neglected in the big SUV race).

The new company will instead be built around small cars, from the snazzy-looking Chevrolet Cruze world car (to be built in Lordstown, Ohio) next year to the minuscule Spark in 2011.

The Spark is a particularly interesting case. I saw embryonic versions of it, in the form of concept cars Beat, Trax and Groove, at the 2007 New York Auto Show. I never thought GM would do anything more than exhibit the fanciful vehicles at shows. But now the Spark (based on the Beat) is coming here in 2011, outsourced to its own Daewoo brand in Korea. GM had the styling done at its Opel subsidiary in Germany, and that is one more luxury the new, leaner company won't have: Opel is being sold to Canada's Magna International.

Will a bankrupt GM create a "ripple effect" dramatically hurting its dealers and suppliers? That's the premise of this pre-bankruptcy video: