Read the August issue of Fixed Ops Journal, the parts,
service and collision magazine from Automotive News.

Devine: Automakers must update business model

The automotive industry is lagging behind its position 20 years ago among investors, GM financial czar John Devine said Wednesday at the 2001 Management Briefing Seminars in Traverse City, Mich.

2001 Management Briefing Seminars index
The auto sector's share of the U.S. investment market has slipped to 1 percent from 4 percent in 1983, according to the Standard & Poor's Register of Corporations, Devine said.

The drop is "a telling report card" of the industry's business model in comparison with the rest of the U.S. market, he said.

The trouble is the industry has baggage that won't be easily shed, Devine said. He cited incentives and excess inventory as two major problems with the business model with no immediate solution.

He suggested that automakers should increase their cash flow by

  • Concentrating on reducing production costs, then pricing vehicles more competitively.

  • Lessening their reliance on mergers and acquisitions for short-term gains.

  • Focusing on shoring up existing markets and growing in emerging markets. Devine said GM is focused on increasing profits in North America and Europe, and growing its market share in South America and Asia.

  • Reduce spending on low profit ventures.
  • 0

    Shares

    ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

    Newsletters