General Motors Struggles to Recover in North America

Strategic Insights -

GM's president and CEO, John (Jack) Smith, acknowledged the company's significant turnaround over the past two years, but emphasized that it still has a long way to go to recover in North America. Despite reporting a third-quarter profit of $552-million (U.S.), the company's North American vehicle operations lost money due to strikes and slow product launches. Smith stressed that GM has structures and policies in place to address these challenges and improve productivity and cut costs, but acknowledged that immediate problems, such as dealing with strikes and production of new products, are hindering the company's progress.

Key Takeaways:

  • GM's third-quarter profit of $552-million (U.S.) was largely due to an accounting change, and North American vehicle operations lost money due to strikes and slow product launches.
  • Smith emphasized that GM has made significant progress over the past two years, but acknowledged that it still has a long way to go to recover in North America.
  • The company has implemented structures and policies to improve productivity and cut costs, but faces significant challenges in executing these plans.
  • Smith stressed that GM is prioritizing customer needs and is investing in technology, including navigation and information systems, to enhance safety and convenience.
  • On-board computer systems will enable remote monitoring and servicing of vehicles, improving customer convenience and reducing maintenance costs.

Statistics:

  • GM's third-quarter profit was $552-million (U.S.).
  • The company's North American vehicle operations lost money in the third quarter.
  • GM's common shares lost $6 (U.S.) in value last week, representing 12% of the company's market value.
  • GM's stock closed at $40.87 on the New York Stock Exchange yesterday.
  • The company made a profit of $2.5-billion on sales of $138-billion last year.
  • GM's operating margins trail those of Ford Motor Co. and Chrysler Corp.
  • GM's newest models will continue to face supply constraints.

Sources:

  • "GM CEO Says Company Is 'Half Way' Down the Road to Recovery" by Timothy Pritchard, Toronto ONT -- By Timothy Pritchard, Auto Industry Reporter, TORONTO