Times are tough for the auto industry, but General Motors is taking action to stay competitive in the long term by shifting its focus from trucks and SUVs to cars and crossovers. At least, that's according to company chairman and chief executive officer, Rick Wagoner. “We at GM don’t think that the shift in demand is a slight or temporary change, but rather we believe it’s a permanent direction for our industry,” he said today.
Wagoner, who spoke this afternoon to the Dallas Regional Chamber at the Hyatt Regency, also addressed rumors of GM possibly filing for bankruptcy. He said such rumors are “not at all constructive or accurate” and pointed out that as of the last available financial information (March 31), GM had $24 billion in cash along with $7 billion in unused credit. Wagoner added that the company’s cash position will remain robust under any foreseeable scenario.
The auto industry will be shaped by many changes, Wagoner said, as it faces a housing slump, credit crisis, struggling economy and record commodity and gas prices. General Motors, which celebrates its 100th anniversary in September, will be ceasing truck production in four plants while increasing small car production in others, Wagoner said. And cars or crossover vehicles will represent 18 of the next 19 new products from GM in the U.S.
“We’re still kicking. We’re still the number one automaker in the U.S. in the world,” he said. “And we have no plans whatsoever to ride into the sunset.”
Wagoner said “the electric car is not dead,” and GM sees this as the best long-term solution to the nation's rising fuel costs. The concept car generating the most excitement is the Chevy Volt, which can be charged in a traditional power outlet and has a driving range of 40 miles on one charge. This covers the commute of 75 percent of the population, and Wagoner adds that the engine will kick in after the 40 miles to offer an additional 300 miles of transportation if needed -- at 100 miles per gallon fuel efficiency.
Hybrids are another big part of GM’s plans, with the automaker rolling out at least 20 different models by 2012. The Cadillac Escalade Hybrid was on display in the lobby, and Wagoner said someone asked him if they were raffling it -- to which he said raffle tickets would cost somewhere in the $55,000 to $60,000 range.
Wagoner said solving the nation’s energy crisis must be a team sport, with automakers leading the way by developing new technologies and finding ways to keep costs down. The government will need to support these technologies with tax credits and fuel subsidies, while consumers must be willing to pay more for a vehicle with better fuel efficiency. (Just a few days ago, there was also the story that GM might bring its 40-MPG Beat, a Euro product, to the U.S.; Wagoner never addressed why it hadn't already.)
Although the auto industry has seen a decline in U.S. sales, Wagoner said the international market is decisively different with the industry posting six-consecutive years of record global sales and likely another one this year. He cited emerging markets in China, Russia, India and Brazil as the biggest contributors to this trend. For example, GM sold 60,000 units in China just 10 years ago, and now GM is the leading international automaker in China with more than one million units sold.
Wagoner was introduced by Ralph Babb, chairman and chief executive officer for Comerica Bank. He said he figured Babb moved to Dallas for the weather. “I think that may be true in February, but I’m not sure it’s true in July.” Wagoner added that the heat reminded him of growing up in Richmond, Virginia, and working summers as a construction worker. “Walking outside today brings back fond memories of a lot of sweat.” --Sam Merten