Not too long ago, there was a period when automakers were flush with cash and decided to diversify. They bought banks and aircraft companies and software and satellites and anything they could get their hands on.
Some of those investments turned out well. But then, these days, almost anything seems to offer a better return than the automobile industry.
The challenge to generate revenue from something other than cars is irresistible. Today's hot area is developing a stream of payments. Look at America Online or AT&T or Comcast Cable. Every month, the checks come in. Once you've sold them, you've got them for life. There are no problems with decreasing market share or owner loyalty. Just count the cash forever.
Think of the potential for OnStar and the in-car Internet business. Add cellular phone service and before you know it, we have customers paying up to a hundred bucks a month in fees. Forever.
Even if we sell those services to only 10 percent of our 10 million or 20 million or 70 million vehicle owners, it's all revenue. Heck, we could forget about making cars. We'll sell our cars at a loss, just so we can sign up customers for our electronic services. Just like Gillette: Give away the razor to make money on the blades.
Now, rebates start to make real sense, but only if we sign up those customers for all of our Internet services. Everybody will be happy, and Wall Street will finally realize that we're just as hot as those dot-com stocks. We'll get our stock price multiple up to 40 or 50 times earnings. That will be real shareholder value.
We'll move our research to Silicone Valley because we don't need all that car stuff anymore. Our cars are just platforms for our electronics.
What do you mean, customers don't want to check out their automotive stocks while they're driving? Simply too dangerous or they can't take the bad news. What do you mean, they've got all this stuff at home and the office and don't want to replicate it in their cars? What do you mean, the cellular phone companies are already there and have no intention of letting us into their business?
What do you mean, I'm in the car business and I've got to sell cars and trucks? Sounds pretty dull.