DETROIT — The last time Barry Engle oversaw any North American operations for a major automaker, customers were ditching gas-guzzling SUVs in exchange for cars.
More than a decade later, he's in charge of making sure General Motors keeps up with the opposite trend as its new president of the Americas. The shift away from cars is among a litany of challenges Engle must address after taking the reins of the automaker's North American operations in April from longtime GM executive Alan Batey, who retired. Engle previously was president of GM International. He was CEO of Ford of Canada in 2008.
Other challenges include a slowing overall U.S. vehicle market, GM's corporate restructuring and a volatile political environment of tariffs and trade negotiations. That's in addition to launching the automaker's redesigned full-size pickups and SUVs.
Engle, 55, spoke this month with Dave Versical, chief of editorial operations, and Staff Reporter Michael Wayland at GM headquarters here. The following are edited excerpts.
Q: What have you been concentrating on since starting the new role?
A: No. 1 is continuing to roll out our new full-size trucks. That's a really important business to us and to our dealers. And frankly, we're still kind of in the middle of that launch. And then secondly is I've been trying to spend a fair amount of time with our dealers and getting to know them, their thoughts on the business and what we can do better and how we can collaborate and push ahead.
You're overseeing operations in Central and South America in addition to North America. What challenges or opportunities does that present?
It's one hemisphere and much fewer time zones than when I oversaw all international operations. I love the South America business because it's so doggone hard, and it keeps you engaged and invigorated, and it keeps you on your toes. It is a place and a market that's extremely volatile. You've got to be fast, and you've got to be nimble, and you've got to be constantly scheming and coming up with new, innovative ways to solve brand-new problems and keep the business going.
It's been a volatile market, but there are signs of a turnaround. How much profit can GM achieve in the near term?
I believe on an ongoing basis that we can produce at least mid-single-digit EBIT returns in a growing market. Brazil this past month was up year over year 20 to 21 percent.
How concerned are you about trade and tariffs? What can you control to lower costs?
Obviously, the trade issues are something of a new phenomenon. It's an important issue for the entire industry. We all industrialized around a global footprint, and to the extent that nationalism has become more the order of the day, that has profound business impacts. And we all need to work our way through that.
Tariffs, in the end, become a tax on the consumer to the extent that the consumer has to pay more for the vehicle. The net effect of that will be to dampen sales in the industry, which is a big issue for everybody. Both the industry as well as the economy. And so, I think, as we collectively work our way through this, we need to be smart about it and think through the implications.
Have you analyzed how GM could offset such costs, particularly on the pickups coming from Mexico?
This is an industry issue, and everybody has footprint in Mexico in varying degrees. Not only for assembly but also for components and parts, and many of those parts go back and forth across the border a number of times before it's all said and done. Nobody's immune from this. This is a big deal. It's going to impact everybody. I don't see how you could possibly avoid pricing.
Depending on how far it goes, the numbers just become so big. If this escalates from 5 to 10 to 15 to 20 to 25 percent, nobody has those kinds of margins.
And so, there will have to be some amount of pricing in order to offset that impact from the business.
GM has been losing market share during its pickup launches. At what point does it decide to increase incentives and go after market share?
That's a temporary phenomenon. We're capacity constrained — couldn't make another truck if we wanted to. I mean there's only 24 hours a day; there's only seven days in a week. So we are adding more capacity, which is step one. And what we've announced is that we're adding 40,000 extra heavy-duty trucks and 20,000 light duties, and to the extent that we need more, then we'll put on more capacity as well.
So you expect full-size pickup market share to return to pre-launch levels?
By doing a staged launch approach, we did that to keep the quality high and to minimize the lost production. And despite that approach, we did lose some production. It's impossible to avoid any loss. So we did lose some production, and, obviously, that's impacted our share. In addition to that, the number of trims and body styles also had an impact.
And given our limited availability, we deliberately launched with a really high mix in trims. But as we get broader availability and get them for the full portfolio out there, we'll be just fine.
In fact, at this stage, because we've been capacity constrained, we've sold essentially no trucks into the fleet business. As we do get availability and we're able to play in some of these other places, there's so much business to be had.
GM will still have unused capacity after the expected closure of three car assembly plants in North America. What's in store for those plants, as additional truck capacity is needed?
We need to manage the footprint for optimum efficiency, married up with the product portfolio. And the product portfolio has shifted for everybody as customers' tastes and preferences have migrated from cars to crossovers and trucks and SUVs. And so, as an industry, all of us are reconfiguring and shifting stuff around.
As we do that, it is with an eye toward improving our efficiencies and our capacity utilization.
Will the launch of HD pickups and full-size SUVs, which are on the same platform, take as long as the 1500 models?
It will be the same measured approach. The same idea, the same philosophy, but we will be able to accelerate it. It won't take as long.
It's higher volume for the 1500 models. There are more plants and more configurations, and it's a higher level of complexity, and, yes, it has taken awhile, but it's the same T1 architecture.
So as we continue next with the heavy-duty and then later with the full-size SUVs, as we go each time, we're applying what we've learned and best practices, and it gets faster and better.
The redesigned 2019 GMC Sierra has a number of exclusive features. Will they eventually filter to the Chevrolet Silverado?
Obviously, we're unique in the industry in that we have the luxury of having two strong brands. One being positioned as a premium brand, so in order to protect and enhance the premium image of that product, it is important that it gets first crack at some of the best features and technologies. And so, as a general statement, we would launch and lead with GMC and then most, or many, of those features would then eventually migrate over to the Chevrolet product.
How is Cadillac doing?
Cadillac is a big opportunity for us. The current products are just fantastic — particularly if you've been in the performance V-series variants. These are world beaters that can, without any excuses, stand up tall against any competitive entry. There's a gap in perception between what we've got and how good the hardware is and what people may remember or think about the brand.
Cadillac is one of the fastest-growing brands in China, with incredibly young buyers. So we've had tremendous success in China with a whole new class of customer.
We're pleased with the success of the Cadillac brand and product line. We know we've got something.
We have a bit of a marketing issue that we need to work our way through. And we believe that the EVs give us an opportunity to do that and to leapfrog a bit and come out with something brand new.
When will GM say all dealers need to be certified to sell electric vehicles? Some have been criticized for not knowing enough about the EVs they're selling.
What happens on the showroom floor is, if the salesperson only gets an EV customer once in a blue moon, they're not going to be current. They're not going to be trained up the way they need to be and feel comfortable with that. They're going to be inclined to sell whatever they feel most comfortable with.
I don't want to characterize it as a chicken-and-egg thing because as we get some critical mass, then that will tend to help in and of itself. But in order to ever make that happen, we need to overcome, more proactively, those issues.
We are now thinking about the entire customer experience and the ecosystem that's required in order to support that and to support the expectations and the requirements of a different customer that we probably haven't seen before.
We're sensitive to it. We understand the issue, and we're on it.