DETROIT -- Under CEO Mary Barra, General Motors is on pace for one of its most profitable years ever, even as its U.S. market share continues a decadeslong decline.
It's achieving that by holding the line on incentives and cutting back less lucrative fleet deliveries to focus on retail customers.
When Barra became CEO nearly three years ago, she found herself amid a ballooning recall crisis during which she implored employees to never forget or repeat GM's errors of the past. Now, Barra is trying to position GM to lead the industry in a future of electric vehicles, car sharing and self-driving technology.
Barra, 54, spoke last week with Staff Reporter Nick Bunkley, News Editor Krishnan M. Anantharaman and Automotive News Print Editor Rick Johnson at GM headquarters.
Q: Now that U.S. sales have flattened, is General Motors able to stay disciplined? Is that what's behind GM's recent production cuts?
A: We have to. There's a shift going on from cars to SUVs, so we're going to be responsive to that. We do believe that we're at a plateau. So to be able to stay at a 17 million, or above -- anywhere where the first two digits are 17 is a good market -- we want to continue to seize that. We think the product portfolio that we have coming out next year positions us very well to continue to do that. But we also recognize that we're a cyclical business, and we will maintain that discipline as we work through the cycle.
As GM looks at filling out its portfolio on the SUV and truck side, is it looking at the car side of the business for products it may not need going forward?
We need to look at what's important to customers. The midsize segment is still a 2 million-unit market. So even though we're seeing the shift, it's still important. We don't look at -- I'll call it a momentum portfolio -- but we look at what is the portfolio customers are going to want in two, three, four, five years and beyond. We make sure we're looking over the horizon to have the portfolio for the future, not just, "We've always had this so we always will." We have efficiencies in our core architectures that give us flexibility to react and be able to not have huge expenditures. We can build on what we already have to fulfill the market demands of the future.
Ford and Fiat Chrysler are moving most car production out of the U.S. Is GM able to continue building cars here?
We look at the total portfolio that we build in North America and what makes sense and where. It's not only assembly, but it's engines, it's transmissions. We look and evaluate that. We're really driving for the efficiencies for how to do that and serve the market with the facilities and the investments that we have.
If the market share of full-size trucks and SUVs declines, is GM in a position to produce the kind of profits its shareholders want?
We're a full-range provider. We want to give the customer choice. We'll continue to reduce cost. We are well on our way. We said from our 2014 base to 2018 on a run-rate basis we would take out $5.5 billion. We are well on our way to do that. I see more opportunity. We have very strong operational excellence, which is driving Six Sigma tools into the whole company and a mindset of everything can be made better. We're going to continue to attack costs while we put out strong products. We want to be able to deliver superior returns when you look across the industry as we go through different shifts and cycles.
What's the time frame for seeing results from Cadillac's retail strategy?
I think we already are when we look at the [average transaction prices] and the growth that we're seeing -- very strong in China and I'll say progress being made in North America. We are going to be very disciplined with our Cadillac strategy, because where we're at with the brand didn't happen overnight. It's going to take time to build it. I was just in New York within the last month doing a complete review. I think we have a very disciplined approach with the right product portfolio coming out now and continuing to achieve and make sure that Cadillac is viewed as, and is, a top-tier luxury brand.
Some dealers and state associations are upset with Cadillac's Project Pinnacle initiative. Why is that the right move now rather than waiting until more product is here?
We view dealers as an asset, but when you look at Cadillac and the footprint and where certain dealers are, we're setting up the channel to be able to deliver the luxury service to complement the vehicles. As you make that shift, we're providing choice and options for our dealers to go on that journey with us or to make other decisions. But I would also say we're listening very carefully to our dealers as we go through this. [Cadillac President] Johan [de Nysschen] has been very involved in talking to individual dealers as well as the dealer council to do this in the right way. To think we can keep everything the way it is and make the shift we need, that's not realistic either.