DFP Interview with Wagoner

[Flybrian]

EXCLUSIVE FREE PRESS INTERVIEW: Wagoner: GM's very much alive

Don't write off carmaker yet, CEO says

September 10, 2006

BY JOE GUY COLLIER

Link to Original Article at Detroit Free Press

General Motors Corp. Chairman and CEO Rick Wagoner has taken his fair share of criticism this year.

Some in the business media have called for him to step down. Wall Street analysts put odds on the likelihood of GM filing for bankruptcy. A major investor pushed him into talks with Renault SA and Nissan Motor Co. about forming an alliance.

So, after a string of positive developments -- costs are down, operating profits are up -- Wagoner can hardly be blamed for being on the offensive.

In an exclusive interview last week with the Free Press, Wagoner was relaxed. He was confident about the state of GM and its future. GM is not in a death spiral, he said.

"For all the obits that are written, the last time I checked, one out of every four cars and trucks sold in the United States is a General Motors product, and no one else is close," Wagoner said. "I would rather have that position than somebody else's."

Wagoner is right. GM's U.S. market share is roughly 25% through August, and the company is well-positioned in such key growth markets as China and South America.

But Wagoner, who started at GM in 1977 as an analyst in the treasurer's office, admits that this last year has not been easy. He's juggled duties and roles, taking over day-to-day North American operations in the midst of financial crisis.

"It was busy last year, trying to do all that was going on," he said.

The work appeared to be paying off. GM negotiated a deal with the UAW that will save the company $1 billion cash each year in health care costs.

Almost 35,000 hourly workers took GM's buyout offer this year, dramatically reducing its labor costs going forward. GM's U.S. sales, on a sharp decline through the first half of 2006 as the company backed off incentives, increased 4% in August.

Instead of returning to incentives as a way to drive sales, GM announced last week a 5-year, 100,000-mile powertrain warranty on 2007 models, which could boost the company's image and the cars' residual values.

"I think it is the kind of thing that will build confidence in our products and brands over time," Wagoner said. "I think it will get some people into our showrooms and into our products that otherwise wouldn't have purchased them."

But, even as GM shows early signs of turnaround, Wagoner continues to be pressured. Delphi Corp., a former GM division and its chief parts supplier, is in U.S. Bankruptcy Court.

At the urging of GM shareholder and billionaire investor Kirk Kerkorian, GM is exploring an alliance with Renault and Nissan, which already operate under an alliance. Both are led by the charismatic Carlos Ghosn.

Wagoner said last week GM does not need a partner to continue its turnaround, but the company is taking a good look at the advantages that could be gained from a deal with Renault-Nissan.

A 90-day review period ends in mid-October.

"It's too early to speculate on the results; we don't have results," Wagoner said. "But I think the tone of the working teams, as has been reported back to me, as Carlos reported, is constructive."

Alliance or not, Wagoner said, he's committed to the company. He said he understands the stakes. He realizes people's jobs and pensions are on the line.

"What motivates you when the coverage isn't so great?" Wagoner asked. "I feel a tremendous sense of responsibility to the job that I have. ... If we don't get this right, there are a lot of people who are going to pay the price."

These are critical times for Wagoner and the company. GM is getting its costs in order. It will start next year with about $9 billion less in structural costs than it had at the beginning of 2006.

But cutting costs is only part of the solution, Wagoner said. Great cars and trucks ultimately are key to sustainable success at any automaker.

GM has had some early successes. The Saturn Sky and Pontiac Solstice roadsters have drawn favorable reviews. The Chevy HHR has been a surprise hit, and sales of the Pontiac G6 are up dramatically from last year.

GM has closed the quality gap considerably with the likes of Toyota Motor Corp. and Honda Motor Co. Cadillac and Buick ranked among the top five brands in J.D. Power and Associates' most recent durability study.

But beating the competition is going to take more, Wagoner said. GM must capture the attention of U.S. consumers, who continue to migrate in big numbers to the import nameplates.

"We know we are not going to win by doing a car that performs as well, has the same warranty, same relative value to the consumer as -- you pick a product, Toyota X or Honda Y," Wagoner said. "We have to give them a product that 'Wow, that looks great! That looks better.'

"The good news is that we can do that."

Contact JOE GUY COLLIER at 313-222-6512 or [email protected].

[rueben44]

Sounds good but we shall see. The warranty news has given me new hope for them though.

[nzr]

No doubt GM is on a positive streak and the bad days are over. Now we wait for the products.

[carstar]

"We have to give them a product that 'Wow, that looks great! That looks better.'

"The good news is that we can do that."

That good to hear that they can make great cars 'cause there isn't a lot of people who gives a crap about J.D awards.

[NOS2006]

That good to hear that they can make great cars 'cause there isn't a lot of people who gives a crap about J.D awards.

191954[/snapback]

Dr. Z does!

[usa1]

That good to hear that they can make great cars 'cause there isn't a lot of people who gives a crap about J.D awards.

191954[/snapback]

You're kidding I hope. Many people pay attention to this. Unfortunately for GM, more people pay attention to Consumer Reports and their fundamentally flawed rating system.

Mark

[jbartley]

[FunkyPig]

It does seem that the tide has turned doesn't it. It might just be working, there might be a GM in the future just yet.

[wjfox]

It looks like there are more positive signs than there have been for a long time. The reviews of the Aura are mostly, but not entirely positive. But after reading this article something hit me that hasn't before. I sure hope there isn't deal struck with Nissan/Renault. The world does not deserve another Renault Alliance.

[GMman]

Listen to the streaming video clips from the link. Rick is an impressive guy. No wonder he's at the tippy top of the world's largest and greatest automobile company.

[GEESIXER]

GET DOWN GM!!!!!!

Hearing that just makes me shickled tittless!!!!!!!!!!!!!!!!!!

[Guest buickman]

Listen to the streaming video clips from the link.  Rick is an impressive guy.  No wonder he's at the tippy top of the world's largest and greatest automobile company.

193140[/snapback]

The gut has personally driven GM to the brink of bankruptcy, WAKE UP! Toyota soon to be #1, more disaster news soon to follow, yet you blind, naive mice will continue to follow.

[GEESIXER]

The gut has personally driven GM to the brink of bankruptcy, WAKE UP! Toyota soon to be #1, more disaster news soon to follow, yet you blind, naive mice will continue to follow.

195893[/snapback]

Ya know, i used feel bad for the way people slammed you on this forum.

but know i see how narrow minded you are. if you didnt say it or suggest it, it is a retarded idea. You do have some very well tought out ideas but the way you try and force them onto people just pisses them off and they quit listening.

then you just become the crazy guy one pays any attention to.

try taking it down a notch and maybe people will listen.

just a thought

[joe_cool]

All I know is that GM is losing ground in the california market, and they seem slow to do anything about it. I work for a chevy dealer and it is rare someone walks up looking for a malibu. I know the products are great but gm needs to get the message out to the masses.