GM’s Prospects and Problems, per the New Boss

Dan Akerson and the Chevy Volt

In a press conference a few days ago, the new General Motors CEO, Dan Akerson, set a quite different tone from his predecessor Ed Whitacre. The most notable change was to acknowledge that the government, as 61 percent owner of GM, would be around for awhile. The elephant in the boardroom, you might say.

The initial IPO is coming in November, but Akerson noted that it might take more consistent earnings and “several stock sales” before all the money could be returned—in a “couple of years.”

There will be expansion and more jobs at the Spring Hill (Tenn.) engine plant, more speed in responding to market challenges, better and more rapidly deployed product—like the Chevy Cruze (an electric version will be testing in Korea)—and he called his Cadillac CTS “the best sedan I’ve ever driven bar none.”

Cadillac CTS-V CoupeThe new CTS-V Coupe (right) is getting high praise; GM’s major partner in China, SAIC, is reportedly interested in buying a “single digit” share in GM from the IPO; quality is up; a new leader is making sense. So, why aren’t sales better?

The short answer is that, while Chevrolet sales have moved significantly higher, overall demand has slowed, and inventories keep growing. Building more stock will likely require discounts to move it, but trimming production will impact revenues and probably give away market share to more aggressive competitors. This is GM’s Big Bind right now.

Since there is little indication of any economic rebound on the horizon, a lot depends on GM’s marketing approach and whether its new management team can restore the company’s credibility with car buyers.

That will have to be done by brand, not corporate successes (most people couldn’t care less about the IPO)—and, I would suggest, by public gestures like dropping the high price ($41,000) of the forthcoming Volt, which Akerson so far has refused to do.

Akerson did say he expects the company’s relationship with the UAW to be not adversarial but a partnership. GM ought to think of its relationship to consumers in the same light.

As a “shareholder” in GM, do you think Akerson is on the right path?


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