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CEO: 40-mpg Cruze key to GM’s rebound



Published: Thu, October 8, 2009 @ 12:01 a.m.

photo

The Vindicator/Geoffrey Hauschild President and CEO of GM, Fritz Henderson, mingles with the crowd while waiting for President Obama to address an audience at the Lordstown Auto Plant on Tuesday morning. 9.15.2009

The Cruze will have more upscale styling and features, a GM official says.

STAFF/WIRE REPORT

The Chevrolet Cruze will be critical to General Motors’ attempt to rebuild its market share, said Fritz Henderson, company chief executive.

In a conference call with media and analysts Wednesday, Henderson was asked how GM plans to increase market share as it eliminates the Pontiac and Saturn brands. Henderson said the company primarily will rely on Chevrolet models to make up for the lost sales.

“With the Cruze replacing the [Chevrolet] Cobalt, we have a number of great opportunities to boost share,” Henderson said.

The Cruze is to be launched from GM’s Lordstown complex in April, replacing the Cobalt.

Brent Dewar, Chevrolet vice president, said in a Web chat with the public Wednesday that the Cruze will feature more upscale styling and features.

“We expect big things from it,” Dewar said. GM also has said the Cruze will get up to about 40 mpg.

In addition to Chevrolet, GM emerged from a brief bankruptcy in July with the Buick, Cadillac and GMC brands.

The automakers’ global market share stood at 11.9 percent in the third quarter, down from 12.4 percent in 2008, largely because of falling sales in the U.S. and Canada, Henderson said.

In the U.S., GM’s control of the market fell to 19.5 percent in the third quarter from 22.1 percent in 2008. Other regions are performing better than expected.

As it fights to prop up its falling market share, GM announced that Mark LaNeve is leaving as its U.S. sales chief. LaNeve, 50, is taking a job at a firm outside the auto industry effective Oct. 15, said John McDonald, a company spokesman.

Although LaNeve’s replacement has yet to be determined, his departure gives the company an opportunity to bring in fresh talent and a different view on sales, Henderson said. But that doesn’t mean a successor automatically will be brought in from outside.

“We would benefit from fresh perspectives,” he said.

GM’s September U.S. sales plunged 45 percent, a big letdown that followed the government’s Cash for Clunkers program in July and August. So far this year, its sales are down 36 percent.

LaNeve has told dealers that his departure was not a reflection of the company’s product or marketing plans, McDonald said. He added that the consolidation and closing of dealerships had taken a toll on him. GM had 6,375 U.S. dealers at the end of 2008 and expects to have 5,600 by the end of this year.

LaNeve had been in charge of sales and marketing until July 10, the day GM emerged from bankruptcy protection, when Henderson took marketing away and put it in the hands of veteran executive Bob Lutz.

GM will fall short of its employment reduction targets by the end of this year, Henderson said, but he’s confident it will end the year with a competitive cost structure.

GM wanted to have 40,000 U.S. hourly workers but instead will have 49,000 by the end of the year. Henderson said early retirement and buyout offers worked but fell short of expectations.

GM had planned to employ 23,000 salaried workers by the end of 2009 but instead will have somewhere between 23,000 and 24,000, he said. That’s because it has added some employees in technology and financial areas and decided to keep its AC Delco parts operation rather than sell it, resulting in more workers being retained, Henderson said.

He said on the conference call the company is paying far more attention to products and customer issues than it did six months ago, when it was consumed with restructuring.

After the conference call, Henderson told the CNBC cable network that the company is not breaking even right now but is moving in that direction. He also said it would be ready to make a public stock offering by the second half of next year.


Comments

1Search4Answers(722 comments)posted 4 years, 10 months ago

I doubt we'll see another car company strongly pass even a 20% market share. Competition is a lot greater than just the Big 3 of years ago. GM needs to accept they aren't the GM of 40 years ago; they are a 1/3 of what they once were. The auto market is a lot different today, people are no longer brand loyal and they want cars that are marketed specifically towards them. GM and Chrysler are the two worst marketing companies in the auto business.

Go back to the drawing boards and completely revamp your marketing. Ford recently has done an excelent job at marketing, probably top dog at the moment.

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2Search4Answers(722 comments)posted 4 years, 10 months ago

I didn't like their cars before they were nationalized... it's why they were nationalized.

GM is going to have a real problem with getting young people to buy their cars. I live on a college campus and it is very hard to find people who drive a GM car. I went to the Detriot autoshow last year and I was talking to a buddy about how sad it was to see GM there (they just parked cars there and had sleezy salesmen making the hard sell). He response was... "what made you even go to the GM section... the only thing I'd sit in from them is the pontiac G8."

Their downfall had nothing to do with the credit seize up from 2008, it was because people are increasingly going to other makes.

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3dbinnc(51 comments)posted 4 years, 10 months ago

I'll never by a GM or Chrysler car or truck. The quality is second rate and over priced. And the fact GM majority owner is the union, makes it even more clear why I can't stand them. They union bleed all they could out of the workers, management and consumers it's time they just went away.

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4Search4Answers(722 comments)posted 4 years, 10 months ago

I have a feeling the employees have had a change of attitude with the current crisis. Any future failures will be traced back to marketing... mainly because the government has their hands in the pockets of GM and will push them to make product decisions that buyers do not want. Also because GM is viewed as the company our grandparents bought their cars from way back when... they need to rebrand their tarnished image....

Kudos to GM though... they haven't completely thrown in the towel like Chrysler has decided to do.

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5Search4Answers(722 comments)posted 4 years, 10 months ago

Just to back up my point here are some snippits from the NYT that would concur with my opinions. http://www.nytimes.com/2009/06/03/bus...

"Most worrisome, many car buyers in their 20s and 30s don’t even consider buying an American car. These younger buyers are effectively replacing loyal Chevrolet, Ford and Chrysler customers in their 60s and 70s, the auto analyst John Wolkonowicz notes. Which is why Detroit’s market share just keeps falling."

"They forecast G.M.’s market share would drop to 17 percent in 2014."

"Some skeptics doubt that these green shoots will amount to much. They say that G.M. is a fundamentally broken company, one that will continue its drift toward irrelevance. And they may be right."

"Surveys of customers by Consumer Reports show that G.M. cars break down more often than Japanese cars. "

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6tomkat(1 comment)posted 4 years, 10 months ago

In responce to dbinnc
GM is not owned by the union. The union has 17%. Hardly a majority stake. Your facts are a little off.

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