DETROIT -- In her first year as CEO, Mary Barra battled the demons of General Motors' past. In the second, she has been trying to predict far into the future.
GM's settlement with the federal government last month of charges stemming from the company's deadly ignition-switch defect largely closed a tumultuous chapter that defined Barra's initiation into the company's top job. Even before then, she had been spending time on topics of growing importance to investors and analysts: autonomous vehicles, ride-sharing and other mobility solutions that promise to alter the car-ownership experience.
That theme dominated GM's Oct. 1 investor conference. GM is experimenting with ride-sharing programs and a fleet of self-driving Chevrolet Volts, among other initiatives. Barra has been spending a lot of her time in Silicon Valley. On a recent trip, her senior leadership team met with three venture capital firms. And Barra even met recently with Facebook COO Sheryl Sandberg.
"We're not sitting there saying, 'Oh, what are we going to do?'" Barra said. "We're saying, 'Yeah, it's changing, and we're going to be a part of it.'"
Barra, 53, spoke Oct. 9 with Automotive News Publisher and Editor Jason Stein, Print Editor Richard Johnson, News Editor Krishnan M. Anantharaman, and Staff Reporter Mike Colias.
Q: GM has been talking a lot about partnerships lately. Has your approach changed?
A: Whether it's connectivity or propulsion systems, it's about when two parties come together and have something to offer that's synergistic and is going to benefit both. You look at the long-term relationship with LG or our very successful partnership with Honda [on fuel cells]. Our partnership with SAIC in China is 15-plus years old. It's a relationship based on trust.
We have tremendous technical resources in the company, but if it's going to take us six months or two years to develop something from the start, and there's somebody else who has it now, why wouldn't we partner with them and get it to the customer more quickly? But we need to maintain control of the ownership experience and have the relationship with the customer.
Some have the view that traditional automakers aren't ready for ride-sharing and other mobility solutions. What is GM doing to understand those changing business models?
One of the key ingredients is connectivity. We've got a leadership position there through a nearly 20-year history with OnStar. Connecting the customer to the vehicle is a key ingredient. We're not sitting there saying, "Oh, what are we going to do?" We're saying, "Yeah, it's changing, and we're going to be a part of it. And here are the assets we bring, of connectivity and having a wide portfolio and having scale." We can lead and disrupt ourselves.
Do you see these alternative transportation models ultimately changing GM's business model?
I think there's going to be many different solutions. When people think about the most efficient, desirable way to get from Point A to B, is it for me to drive myself? Is it for me to use a sharing model? Is it sharing with multiple people? We have the spectrum to do all of that.
Now add autonomous driving onto that, which is fundamentally going to create a safer environment and reduce congestion. Those are key technologies that we have. I can't perfectly describe where we're going to be in five and 10 and 15 years, but I can tell you the company has all the assets. We do a lot of experiments to really understand where it's going.
GM has stopped competing in a number of global markets over the last 18 months. What led to those decisions?
One of the criticisms of the industry is that, as we deploy capital, it's got to generate a return. You can see the decisions we've made on Chevy Europe and Australia, Indonesia, Russia, Thailand. As we've gotten improved financial systems to be able to really have insight into the business, in every country, you've got to ask: What is the investment, and am I going to cover my cost of capital and generate an appropriate return for my owners? And if I can't, why am I there?
Which is a different philosophy from the past, when people said, "Let's be everywhere."
I think so. I don't think anybody said, "Let's be everywhere and lose money." But we've also looked at places where traditionally, OEMs haven't made a lot of money because of the cost sensitivity of the market. If you look at India, it's an emerging market, so it's going to be bumpy. But I believe, over time, there will be a growing middle class, and it will be the third-largest market, whether it's in five or 10 years.
But they're all going to have one of these (lifts up her iPhone). When you start to have discretionary income, you're probably going to have a smartphone before you have a car. Once you buy a car, wouldn't you want to be able to integrate that?
You've said you're more carefully evaluating what segments to compete in.
If you look in China, we now have a very strong SUV portfolio. But in some cases, we were too late. So one of the things we've really driven into the portfolio-planning process is to look over the horizon, five, seven, 10 years out. In a future that's more connected, where there's more sharing models, we're challenging ourselves to say: In that world, what's the right product portfolio?
For a long time in this industry, it was, "Here are the segments; just have a really good one." But now, there's more change. Look at the Buick Encore. That's one where we led. I rolled that vehicle out a few years back in Detroit, and people were like, "What's this?"
How do those decisions get made?
I put a lot of faith in my leadership team. Fifty percent of my senior leadership team are people who have been here less than five years. We have very constructive, tense debates about what products get in the portfolio versus what do not. We take into account all of those diverse experiences and mindsets of people who've spent a lot of time in India or China or other places. And we should argue. It's not just about what's selling today.
Johan de Nysschen's turnaround plan relies on lower inventory and incentives and better brand health. But Cadillac is losing market share. How long can you afford to lose customers?
The way you have to look at Cadillac is, if you don't have the foundation right and you start building the house, the problems will show up later. What does Cadillac stand for? What is the right portfolio?
Johan has a tremendous depth and understanding of luxury. It's not just looking at what the other luxury brands have and replicating that. It's looking at where luxury is going. There are some things that Johan is looking at that are very innovative and redefining how a consumer thinks of luxury.
Is there a vision of what Cadillac wants to be? Does GM want a seat at the table with Mercedes and BMW and Lexus?
Yes. Well, I would say Mercedes and BMW.
But GM wants that kind of volume and product lineup?
We're not going to chase volume. We're going to look at how do we define -- not just copy but define -- a place at the table that Cadillac delivers luxury, looking forward, not looking back. That's what Johan is working and driving.
Cadillac didn't get where it is over a few years. Getting the right portfolio with the right experience, building what the brand stands for, is going to take some time. But we're going to do it.
It sounds like GM also wants a better partnership with retailers as it approaches all of these changes.
Absolutely. I see our dealer network as a tremendous benefit. The vehicle is only getting more and more complex. People buy smartphones, and they make their appointment to go spend time at the Genius Bar. Think about how complex your vehicle is, and it's going to get more so. What's better than to have that relationship with a local person who can teach you? I spend time with a lot of dealers. They get it, and they want to be a part of it.
You said last year that you wanted your work force to remember the recall crisis and be marked by it. What evidence do you see that it has stayed with people?
Speak Up for Safety, I think, is one of the best. We put this practice in place and told everybody, if you see something that doesn't make sense to you, first of all, we don't want you to just automatically put it in Speak Up for Safety. Walk across the aisle and go talk to the engineer who's responsible for it, or ask your boss. But if you don't get an answer you like, register it in Speak Up for Safety. We've celebrated the people who have put things in.
