DETROIT AUTO SHOW -- 1997

Smith, Wagoner bullish on GM

Originally published: Jan. 13, 1997

DETROIT -- With new cars and minivans coming and the labor troubles of 1996 behind them, General Motors' top executives are upbeat about 1997.

Automotive News Staff Reporter Charles Child interviewed the top five GM executives -- Chairman Jack Smith and Vice Chairman Harry Pearce, plus executive vice presidents Lou Hughes, Rick Wagoner and Mike Losh -- at the North American International Auto Show on the following topics:

GM'S FALLING SHARE

Pearce: “We got into a lot of trouble historically by being driven by pure market share. You can dump a lot of vehicles into fleets and buy market share (with incentives). We're not going to do that anymore. Jack (Smith) wants to grow market share, but he wants to do it profitably.’’

Wagoner: “We think 33 percent is our traditional share. We ought to get to that. I'm not sure we can do all that in '97. It may take a little longer. About 22 percent of our production (in 1997) should be in products introduced over the last year.”

PROFITS

Losh: “We got our profits (in recent years) the old-fashioned way: by improving our cost structure. The biggest contributor has been material cost reduction. As I look forward, material improvements will continue to be the biggest gain. The second-biggest gain will be manufacturing efficiency.”

Wagoner: “We have some products that inherently don't make money. It's not unique to us. Small cars are not profitable. Small pickup trucks are not (profitable). The challenge there is one of the reasons why we've driven so hard on the global front.”

GLOBAL GROWTH

Pearce: “You are seeing the most dramatic expansion of General Motors internationally since the early part of the century.”

Smith: “We are stretched thin. And one can question whether we're trying to take on too much in the international area. But it's a one-time opportunity to get in these new markets.”

Hughes: “We have to add a lot of capacity (in Asia). We're building two (plants) as we speak in Asia. We can't do everything in Asia by just building a series of greenfield (plants). We'll also have to look at acquisitions down the line.”

USED-CAR SUPERSTORES, PUBLICLY OWNED DEALERS

Smith: “(Used-car superstores) will bring a response from the dealer body to be competitive. And they can do it. You're going to see more auto dealerships being traded on markets. The U.K. market is primarily owned by companies that are publicly traded. And it hasn't made any real difference. It's a free market. It's healthy to let markets develop. How do I know what the right answer is? I'm sure not going to lop off part of it (superstores or publicly owned dealers) if it's going to be the right answer. We have a very strong dealer body. They know the business; they'll be good.”

Wagoner: “They're moving pretty fast. It's changing the landscape. Some of the small dealers and the dealers who don't have the customer satisfaction message -- that's going to be the crunch point.”

BRAND MANAGEMENT

Pearce: “Chrysler has done a good job (in understanding the market). We've got to do a better job.”

Smith: “With the emphasis on brand management, (GM's advertising) is going to get focused. A number of the brands are doing a much better job with advertising. Some are really good -- Saturn, Chevy trucks, Pontiac. There are others that still need improvement.”

GM'S CORPORATE CULTURE

Pearce: “GM is getting stronger -- we are willing to take on change in a way we never have before. But what we never want to lose track of is how we got in trouble -- we lost our humility in the past.”

Smith: “We clearly need to have more of our foreign nationals working here in the United States.”

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