First Time in GM History

[HarleyEarl]

Auto news Wagoner eager to get GM on track Foreign sales growing, but his focus is the U.S. market November 25, 2005 Email this Print this BY TOM WALSH FREE PRESS BUSINESS WRITER For the first time in its history, General Motors Corp. is now selling more cars and trucks in other countries than it does in the United States, GM Chairman and Chief Executive Officer Rick Wagoner told the Free Press. This historic shift reflects both GM's dwindling share of the mature U.S. market and its promising position in China and other fast-growing Asian economies. But despite strong sales growth overseas, Wagoner stressed that GM's future still depends largely on whether he can reverse huge losses in the North American auto market, where GM has lost $4.8 billion so far this year, triggering a plunge in its stock price and downgrades of its debt ratings to junk status. "Our fate is going to be determined in the next three to five years on getting this business in the U.S. turned around and profitable," he said Wednesday during an hour-long interview in his 39th-floor office at GM's Renaissance Center headquarters. "That's what's going to decide how good GM is going to be. And then I think, over time, it's going to be how well we use our global resources to take advantage of where there's growth," he said, two days after announcing plans to cut 30,000 jobs and halt production at 10 U.S. plants. Wagoner, 52, exuded energy and confidence about GM's turnaround effort, while admitting that he'd prefer not to be digging the company's U.S. operations out of a financial ditch. "I'm not glad we're here," Wagoner said, "but this is a chance to really focus in and see what you can do when the pressure's on. This is the opportunity of a lifetime to transform GM. It's not easy, but we've got good people and they're enthused about it." Wagoner said he was surprised recently to learn from GM marketing analyst Paul Ballew that GM likely will sell 4.5 million vehicles in the United States and 4.6 million abroad this year. "That's a trend that's going to make the company look very different," Wagoner said. In 2004, GM sold 4.7 million cars and trucks in its home market and 4.3 million in other countries. In 2003, GM sold 20% more vehicles at home than abroad. Until seven or eight years ago, GM had virtually no presence in Asia. Now, thanks to a push launched by former CEO Jack Smith and accelerated by Wagoner, GM is one of the leaders in the fast-growing Chinese auto market and has established what Wagoner called a "fledgling, but important" presence in India. During the most recent three-month period that ended Oct. 31, GM made a $176-million profit in Asia while posting a loss of $1.6 billion in North America. Wagoner also talked during the interview about the dangerous, looming showdown between the UAW and parts supplier Delphi Corp., and about why he thinks GM is on the cusp of a revival in popularity of its cars and trucks after decades of decline. One major threat to GM's turnaround is a possible a labor strike at Delphi, its largest parts supplier, where CEO Steve Miller and union officials have been exchanging heated words for weeks. Delphi filed for Chapter 11 bankruptcy protection Oct.8. Miller has set a Dec. 16 deadline to negotiate new labor contracts or he will ask a judge to void existing pacts. Union leaders have rejected Delphi's demands for deep wage and benefit cuts. A Delphi strike could choke off GM vehicle production, further weakening GM's financial condition by draining its cash cushion. Wagoner said a GM team is "working like crazy" to help defuse the Delphi-UAW confrontation, but wouldn't discuss specifics of whether GM might fund buyouts or early retirements for former GM workers at Delphi. "This has been a difficult period," he said, for both Delphi and GM workers. "So I think everybody's reeling a little bit about how fast things have moved south." Asked about the impact of a possible Delphi strike, Wagoner said the "worst-case scenario could get very difficult for everybody. It's hard to believe anybody gets through that process unscathed." But he added, "The very nature of it being a high-risk scenario is the kind of thing that leads rational people to sit down and work through a constructive solution." After lengthy discussions with the UAW, GM recently took two big bites out of its costs, with a deal to shift some health care costs to GM retirees and the plan announced Monday to close plants and bring employment and production capacity in line with GM's lower U.S. market share. Wagoner conceded a point made recently by UAW President Ron Gettelfinger and others that GM cannot simply cut its way to prosperity. And although overall sales figures don't show it yet, Wagoner insisted that the new cars and trucks GM is developing eventually will produce revenue growth. "The evidence is on the road today," Wagoner said, of the "inherent goodness" of GM's new product offering. He cited recent launches of the Hummer H3, Pontiac Solstice, 2006 Chevrolet Impala, Cadillac DTS, Chevy HHR and Buick Lucerne as examples. He said many respected automotive publications, which had often been critical of GM vehicles in the past, are singing a different tune now. "Not every write-up is, 'This is the greatest product in the world,' but virtually every one says, 'This is a very competent product,' and a lot of them, even from the toughest critics, are saying, 'This is a first-class automobile,' " Wagoner said. Several new products like the H3 and Solstice are small-volume niche vehicles, but Wagoner said higher-volume products such as pickups, large sport-utility vehicles and crossover vehicles will dominate the new-model launches in upcoming years. Wagoner has been a top-level GM executive since 1992, serving as chief financial officer, chief operating officer, CEO and chairman. He has therefore taken plenty of flack from financial analysts and media for being part of the crew that steered GM into the financial ditch. He doesn't appear to let the barbs bother him. "I've got a very important job and spend thousands of hours on it," he said Wednesday, "but the job isn't me. Like other people with terrific families, I worry about the same things home as you do. What were the kids' grades last quarter or semester? Are you doing what you're supposed to be doing in school clubs or sports teams?" Would he rather be doing something else? "I do this because I like to do it. Would you rather be in a game winning 80-50 where everybody's just kind of hanging around?" asked Wagoner, a former Duke University basketball player. "Or would you rather be in a game where this is, man, you guys are behind and there's 10 minutes left on clock, you've got to move this thing, and this is what you're trained for and this is what you want to do?" Many people reading this are probably thinking they'd prefer to be on the team with the 80-50 lead. But that's why Wagoner is sitting in his chair, and we're not.

[Member55]

Follow the money.

[razoredge]

Now we just need the media and as well as some of the posters on this site to go overseas and explain to those poor souls why they should not buy GM :rolleyes:

[aaaantoine]

I think this little statisic is pretty cool. It shows us a lot about the shift in the global economy, and also shows that GM has more than just the NA market if they get screwed over here.

[HarleyEarl]

It feels kind of weird that GM sells more vehicles outside the US than in it....that's almost a cultural shift of huge proportions...well, maybe I'm overstating it a bit.

[siegen]

Now once Toyota starts selling more cars in America than in Japan (does it already??), the world will really be upside down!

[HarleyEarl]

It really has gone upside down!....for example, Buick is highly regarded in China...a prestige car....here, not so much.