If GM's Akerson Gets His Way U. S. Consumers Will Suffer

Translation: Most consumers still have a long road ahead of them in the recovery process. Certainly, Akerson hopes they drive GM cars along the way.

Such realities make me wonder if Mr. Akerson is in touch with the realities of Main Street America, where most of his customers come from. The current price of gas, averaging nationally about $3.70 per gallon, is taxing the middle class enough with lagging wage growth, high unemployment and rising food costs. Add on $1 per gallon gas tax, as Akerson suggests, and it doesn't take an economist to understand that most would be taxed to the point of difficulty.

GM's CEO called for the gas tax in an interview earlier this month with the Detroit News, suggesting the dramatic increase would encourage sales of the smaller, more fuel efficient cars like the Chevrolet Cruze the company is now manufacturing and selling. In making the case, Akerson said a higher gas tax would make his "Republican friends puke." But, he felt like the big pinch at the pump would force customers out of SUV's and into the smaller cars including the forthcoming sub-compact Chevrolet Sonic GM is betting its future on, so he made the bold statement.

I don't know about his Republican friends, but I do know about his American customers, including Republicans, yes, but also Democrats, Independents and a variety of other lesser-known political parties. If his Republican friends get crabby, that's his problem. If the American consumer gets overly taxed at a difficult time, that's an altogether different problem.

That's the one I'm worried about. That's the one you should be worried about. That's the one GM's Akerson should be worried about.

Already we've seen GM price the Sonic, destined to become America's first true domestically made sub-compact when it reaches production, at a premium compared to competitive models, the upshot being lots of extras including 10 passenger airbags and keyless locks. That's a more reasonable way to sell cars and reach profitability, in my opinion. Build a good product, price it profitably, and work very hard to sell that product.

The strategy has worked well for Ford and CEO Alan Mulally, and he's not calling for a gas tax increase. Neither did Ford take a government bailout.

That's not to pick on GM for needing help and taking it when it did. The company has come back stronger and America is better of because of it. Overall, Akerson's leadership has been fine. But taking a bailout, then bankruptcy, and then suggesting without regard for the plight of the American consumer, who is stressed, literally, financially speaking, that a $1 gas tax is a good idea now shows he's out of touch with the real situation occurring at Main Street America's economic ground zero.

I'd hoped Detroit had lost its hubris and in many ways it has, but I fear that GM's recent success including a blockbuster IPO and Chevrolet's sales strengths have confused the company's leader, pushing him to a point that the very consumer his company relies upon is in a stronger position than he thinks. if he does not know that the increase of sub-prime auto lending rolled heavily out by the industry in the last year has had a lot to do with recent success I'm even more concerned.

During the recession, people stopped buying cars due to uncertainty in the marketplace and a lack of easy credit. After the recession, when automakers asked for and got a boost from loosened credit criteria, consumers came back. For now, they're still there, as many dealers have reported robust sales in recent months. The manufacturers, including GM, are making affordable, well built cars and consumers have been buying them.

But enter in Bernanke's comments, and the realities that most of us already knew, and combine those statements and facts with the erosion of pent up demand sure to come after last year's robust activity fueled by proverbial low hanging fruit - the return of sub-prime lending - and one can see both the consumer and the automakers will be walking a fine line of mutual success in the very near future.

Taxing consumers with a whopping gas increase of 50 cents to $1 per gallon would be a very damaging blow to both parties in this journey. Sure, GM might sell more small cars than SUV's as Akerson suggested, but reality suggests overall sales volume might drop below anything the company has forecast as buyers struggled to make ends meet, unable to get any credit for new cars or unwilling to try in a difficult economy.

My advice to Akerson is to focus on building and selling the best and most efficient cars GM can make. On that note, they've been doing a good job. But when it comes to burdening the American consumer with a heavy and punitive gas tax, he should leave that issue alone.

David Magee is the author of 12 books, including Turnaround: How Carlos Ghosn Rescued Nissan and How Toyota Became #1.

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