DETROIT -- It has been more than three years since General Motors emerged from bankruptcy liberated from much of its bloated cost structure. So why is GM still far less profitable than archrival Ford Motor Co. in the bread-and-butter North American market?
An equity analyst sprang that question on GM's top brass last week during its third-quarter earnings conference call (albeit worded a bit more diplomatically). He got a refreshingly candid answer.
Chuck Stevens, GM's CFO for North America, laid out a few key reasons why GM's pretax profit margin of 7.8 percent in North America lagged Ford's 11.9 percent.
"We have a clear understanding of the gap," Stevens says. "We know what we have to do to close it."
Here's how he sizes it up:
1. Product cycle
GM's most profitable vehicle lines are also its oldest: full-sized pickups and SUVs that analysts say carry profits of more than $10,000 per unit. That helps the much-fresher Ford F series garner an average transaction price of as much as $1,000 more than the Chevy Silverado.
GM's answer: It will go from having "the oldest portfolio in North America to the freshest" over the next two years, Stevens says, with redesigns or freshenings of vehicles that account for about 70 percent of GM's U.S. volume.
That includes those long-in-the-tooth pickups and SUVs. Stevens expects "at a minimum" to erase that $1,000 pricing gap when the next-gen pickups are launched, which is expected by the summer.