GM Loses Its CFO

General Motors... We keep hearing about the great turnaround, but I have some doubts. Several years ago, we had a top management team filled with folks who had been at the firm for decades. One had to wonder if the firm lacked the fresh blood needed to see the world differently and effect real change. Now, we have may have more turnover than optimal. That starts with four CEOs over a two year period. Now, we hear that Chris Liddell, the CFO, has chosen to step down after only serving in the post for 14 months. Could this departure be a troubling sign? According to the Wall Street Journal, Liddell had some doubts about the company's strategy. Here is what the paper reported:

Mr. Akerson (GM's CEO) has green-lighted a drive by other top executives, including Mr. Ammann, to rebuild an in-house auto-finance business, a move Mr. Liddell has voiced some doubts about. "I am philosophically against having a $100 billion finance company attached to a $50 billion to $60 billion car company," he said in January. "In a [market] downturn, we might be exposed. It's critical we have credit flowing through those times."

I've also wondered about the move into auto finance. After all, GM used to be in this business (GMAC), and it divested the unit amidst many problems. Why does an automobile company need to have an in-house finance operation? Many auto firms do, but that does not mean it's the optimal strategy. Should GM really be making subprime loans with an in-house credit arm? Could the sales resurgence be driven, in part, by making credit available to some folks who will have a hard time repaying the loans?

I wrote about this issue back when GM acquired subprime lender AmeriCredit in 2010. Here is what I said on this blog, referring to an article on Forbes.com about the deal:

The article goes on to explain that, "The two companies have had a financial relationship for years. AmeriCredit, which already works with about 4,000 GM dealers, now gets about one-third of its business from financing new and used GM vehicles, GM said." That comment actually intrigues me, because one has to then question why GM needs to acquire the firm in order to accelerate sales. When a merger occurs, we should always ask: Why do these firms need to join together to cooperate? Why would a simple contract not do the job just as well? In this case, these firms appeared to be cooperating and working together quite a bit. What is it about that arrangement that was insufficient? Why the need to now merge?