Industry skeptics say the dismantling of eGM is one indication that the automotive giant is retreating from its e-business ambitions, putting aside its dotcom dalliance, and returning to the real world of plastic and rubber and steel. "When they formed eGM, it looked like the Internet was the wave of the future," says Paul Eisenstein, publisher of The Car Connection (www.thecarconnection.com), an automotive industry e-zine. "Every company thought if it got into online retailing it was going to make money." Then the Internet bubble burst. The situation at GM isn’t an isolated one, Eisenstein says; other auto companies along with GM are redefining their e-business strategies.

However, GM executives, including CEO Rick Wagoner and CIO Ralph Szygenda, say the changes at eGM are not indicative of a wholesale retreat from e-business. "The intent from the beginning was to create a separate function for two to three years to drive [e-business capabilities] across GM," says Szygenda. Contrary to what critics claim, Wagoner and Szygenda say eGM’s dismantling is a sign of success, asserting that e-business has become an integral part of the company’s fabric.

By putting a positive spin on eGM, are Wagoner and Szygenda engaging in a bit of revisionist history? Even if that’s the case, it doesn’t matter. The dispute over eGM is meaningless, essentially a tempest in the auto industry’s largest teapot. Regardless of eGM’s fate, GM’s e-business initiatives have succeeded in changing how the company makes business decisions.

In Need of an Overhaul

Headquartered in Detroit, GM has long needed a change in fortune. Consider this famous fact: GM’s share of the U.S. auto market dropped from 50 percent in the 1960s to a low of around 27 percent in 2000. Last year was the first year in a long time that GM’s market share rose, however slightly (to 28 percent, according to automotive publisher Wards Communications). Meanwhile, GM is often hamstrung by its own size, which makes decision making and change slow; by vehicle designs that critics frequently characterize as uninspired; and by high labor costs and other overhead. On top of that, the North American auto market, which accounted for roughly $107 billion of GM’s $141 billion in revenues last year, is expected to decline by as much as 10 percent in 2002.