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

In his first day at the helm of General Motors, 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.”

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