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New GM CEO: Higher Margins Needed to Make Next-Gen Cars

In his first day at the helm of General Motors (s GM), Fritz Henderson wants to deliver one message: We’ll get the job done. Henderson repeated that pledge, in various ways, at a press conference this morning, saying that the automaker aims to quickly reinvent itself as a competitive enterprise whether in or out of bankruptcy court. “We get it,” he said, referring to the Obama administration’s assessment (and rejection) of GM’s turnaround plan. “We need to do more, and we need to do it faster.”

Wagoner, Lutz, Henderson with Production Version Chevrolet Volt

Henderson acknowledged (and agreed with) the auto task force’s criticism that GM has historically relied too heavily on revenue from high-margin trucks and SUVs. Going forward, he said, “everything’s gotta pay rent” — even in an economic climate like today’s.  A car like the extended-range electric Chevy Volt, however, probably won’t make rent (i.e., generate meaningful profit) for at least a couple generations. As we’ve noted before — and as Obama’s auto task force pointed out in yesterday’s report — the first-generation, $40,000 Volt will almost certainly be a money loser for GM.

Henderson didn’t say that outright, but he did indicate an awareness that GM will need to buckle down and boost margins across its entire lineup in order to finance continued development of the Volt. “As we get into the next generation of technologies,” he said, mentioning the Volt and GM’s lineup of flex-fuel and hybrid vehicles as examples, “that requires money. That requires investment.”

10 Responses to “New GM CEO: Higher Margins Needed to Make Next-Gen Cars”

  1. kerry bradshaw

    Henderson may agree that with higher oil prices, trucks and SUVs can be risky, but there is simply nothing that GM can make that will generate those profits. In effect, he’s saying that GM will be even worse off than before, when Toyota and Honda were able to make enough profit to redesign their cars twice as often as GM. Unless GM lucks out and finds some designing genius who can style cars that will be lusted after (the auto business is really all about looks and comfort – even the vaunted Beetle never sold cars heavily into the middle class, those who bought cars frequently) there is no reason to believe that GM can compete if they make the mistake of trying to exist on small cars. Everyone knows that that simply won’t work. Can you imagine Mercedes
    doing that? Obama is talking out of both sides (actually all four sides) of his mouth by contradicting himself – he wants “high tech cars” (what yhey are and why he thinks they will succeed remains a mystery – remember the Edsel?) then the next minute claims that the Volt won’t help GM. Then he mistakenly claims that GM is far behind on hybrids (apparently Obama doesn’t keep up with auto news)
    and that they wil be salvation (don’t mention that Toyota has never made a dime off its best selling hybrid). Oh, yeah, the future sure looks rosy with Obama sticking his big foot in his equally big mouth.
    Now, what exactly became of that campaign pledge to balance the budget? Hmm…

  2. Electric Vehicle Owner

    ““As we get into the next generation of technologies,” he said, mentioning the Volt and GM’s lineup of flex-fuel and hybrid vehicles as examples, “that requires money. That requires investment.”

    Ya, whatever, build them already. You’re 35 years late.

    Nice way to tell us that for decades they’ve been overcharging consumers for wallowing, herky-jerky, obsolete technology, milking it beyond dry, and still managed to lose money.

    Flex fuel was/is an ok concept until the scams that are low mileage corn ethanol and cost more energy to make it than you get from it with no existing infrastructure (unlike electricity) hydrogen came along and dirtied it up. They should just ‘fess up and say high energy biodiesel and non-food-crop low energy ethanol, which are at least cheap and doable.

    In the meantime, “in terms of overall performance, the diesels of Audi and Peugeot took four of the top five positions with the No 2 Audi R15 TDI winning by 22 seconds over the No 8 Peugeot 908 after 12 hours of racing.” To beat Audi’s killer diesels, Peugeot is going with a diesel hybrid, with the electric drive providing the performance edge: