Cash-for-clunkers is like putting a kid’s Scooby-Doo Band-Aid on the gaping hole in the hull of the Titanic. It’s a typical political ploy that’s all frosting and no cake. The program addresses symptoms but not causes. It’s the type of short-term, tactical reaction we’ve come to expect from the majority of politicians that not only can’t see the forest for the trees, but don’t even know where the hell the state park is. Unless GM and Chrysler change the fundamental elements of their business model, recovery for them is simply not going to happen.
A business model consists of three things:
- What–the offerings provided to the market
- Who–the target customer who finds the most value in the offerings
- How–the distinctive capabilities that provided differentiated value in the offering
So far, we haven’t seen the results of any serious efforts by GM or Chrysler to address these foundational building blocks. Cost-cutting and eliminating dealerships will only yield value if the money is used to change WHAT cars they are offering, WHO they’re targeting with their marketing efforts and HOW they are creating unique capabilities to deliver differentiated cars that are valued by potential customers. Until then, watching the government pour our money into the cash-for-clunkers farce is about as painful as listening to a Paris Hilton song.