Q: What's your market outlook for the rest of the year?
A: We do have some challenges ahead of us, particularly because of semiconductors. But the market is still really strong. There's a lot of tailwinds from a market perspective in terms of the stimulus. We have the end of COVID in sight. Given vaccines, high savings rates, low interest rates, strong residual used-car prices, all of those things that point to a pretty long, robust road ahead of us from an industry volume point of view. Notwithstanding the very specific current situation, we're very optimistic that we've got a lot of goodness ahead of us.
You were promoted to North America chief in July, followed by the appointment of Travis Hester as chief EV officer in November and Paul Jacobson as CFO in December. How have new players on the leadership team affected GM's crisis response?
[The pandemic and chip shortage] have provided an opportunity to really step back and reflect on what's really important and where we focus our energies. I think it's accelerated also a lot of transitions that maybe we were contemplating in one way or the other.
The way that we committed ourselves to accelerating the pivot, it's really brought the whole leadership team together on one focus and on one mission. You see it come together in the "Everybody In" or the brand campaign. It's all a journey. We've got a lot of new players. Every time that happens, you get more diverse thought into the situation, and it only enriches it.
Are you confident that GM can continue to protect pickup and SUV production as the chip shortage drags on?
The way that we've been playing it is just constantly prioritizing and re-prioritizing to protect the most in-demand and profitable products. We are, together with the dealers, selling deeper into the inventory, turning inventory faster. We haven't found the bottom of that yet, and I hope we don't. I think that's something that we will carry forward into the future. Some of the other practices we'll carry forward into the next part of the journey, which is selling more into the product pipeline versus off the lot and running our operations very lean, including dealers. I had one dealer tell me in a meeting, "In good times you develop bad habits, and in bad times you develop good habits." I think that's something to be very mindful of. The agility of the entire team, including our dealers, demonstrated through this is something that will carry forward.
What are GM's target inventory levels post-pandemic?
We don't know the answer to that yet. The industry is used to a 60, 80, 90, 100 days kind of thing. And we're well below that stage. At what level do you start to lose sales and market-share opportunity? As much as there's a huge and growing number of people that want to be able to shop online, there's still a lot of people who want to go to a dealer lot and have a look around. Every month gives us more insight in terms of that dynamic, operating in that situation. It feels like [the inventory target is] not as lean as we are today, but it's not at the inventory levels that we had before.
What changes have you made to retail operations over the last year?
Everything is simpler. One reason it gets complicated is when you have a lot more inventory, you're spread out a lot more. Part of what we're learning as we start to rebuild inventory: How do we rebuild it? How is it constituted? We have a program called Focused Ordering, for instance, where we can work with dealers and customers, say, "Those ones turn faster. You're going to be the best proposition overall. Let's focus on those."
Those are all things that we're keeping a close eye on and learning about. But we are some large number of months away from where we need to decide on what's an ideal of inventory in the new normal. Rest assured, it's something that's on the very front of our minds. By the time we get into this phase next year, moving into a high selling season again, we'll be in a better position to say, "This is what we think the future looks like from an inventory management point of view." We're looking at different formats for managing inventory as well. That's all playing out. It's still early days. This year we're working out a lot of those details.
Why does the retail model need to change for EVs in particular?
We're looking at a situation where we grow the uptake on EVs from its relatively small base to a much higher curve as time goes on. That causes us to reflect on what are the pain points, what customer experiences are causing people concern in terms of considering an EV versus an ICE vehicle. The digital retail platform is intended to address all the pain points, to make it a seamless experience for the consumer. You're not going through different handoffs from one part of the process to the next, and where there are handoffs, they're seamless.
So if you're online and now it's time to go visit a dealership, you don't have to reset the conversation. Likewise, different people want to enter that experience at different points, so it needs to be able to facilitate that. We want to get into 4,000-plus dealerships across the country eventually. We need to grow our way into that and make sure that we're executing with excellence on those integration points.