Barack Obama fired GM CEO Rick Wagoner this week, and has begun to push for the auto company to shuffle its board. It looks as though GM has stumbled onto just the right candidates, ones that will get approval on the floor of Congress. Why? They’ve started reporting to the Senate. A source on Capitol Hill forwarded the first status report from GM to their new governmental masters:
With so much happening this week related to GM and the automotive industry, I wanted to call your attention to a few important items. Going forward, I commit to sending you regular updates to ensure you have the latest information about the progress we are making toward reinventing our company.
GM sales were announced yesterday and while the numbers are down 45% compared to last year, they are beginning to trend up compared to February 2009. In March, seven of eight GM brands saw total sales increases compared to February with total volume up 23 percent, or more than 29,000 cars, crossovers and trucks. One reason for this uptick in sales is the leadership shown by all of you to help stabilize the industry and stimulate demand. With the launch of GM’s Total Confidence program, the government backing of domestic warranties and GMAC’s announcement on additional availability of funds for consumer lending (and accepting applications under a 621 CB score), we hope to see volume continue to build into the spring selling season.
I’d like to call your attention to sales of GM hybrid vehicles; we sold a total of 1,612 hybrids in March, illustrating the wide range of hybrid product offerings available. We now offer the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and Sierra, Cadillac Escalade, Saturn Aura and Vue hybrids. So far, in 2009, GM has delivered 3,622 hybrid vehicles.
You can help improve sales by enacting fleet modernization legislation. Currently, thirteen countries have adopted such an incentive policy to stimulate vehicle sales. GM strongly believes a fleet modernization incentive for consumers would jump start sales and help replace the current auto fleet with cleaner, more fuel efficient vehicles. We look forward to your support in helping bring forward thoughtful legislation in this area.
GM Progress Report Submission to UST
GM submitted a progress report to US Treasury on March 31 as a follow up to our February 17 submission. General Motors continues to reinvent itself, making important and noteworthy progress on multiple fronts. Since February 17:
- Buick has displaced Lexus as Number 1 in J.D. Power’s annual Vehicle Dependability Study
- General Motors has become the global benchmark for workplace safety
- Chevrolet has launched the all-new Camaro, providing 29 mpg on the highway using GM’s award-winning SIDI V6 engine, with final preparations being made for the launches of the all-new Chevrolet Equinox, GMC Terrain, Buick Lacrosse and Cadillac SRX crossover
- Select U.S. media drove prototype Chevrolet Volt models, with production launch on track for the fourth quarter of 2010
- Employee attrition programs, a key Restructuring Plan component, are running ahead of schedule
Overall cost reduction efforts are running ahead of schedule, resulting in better- than-Plan performance in the first two months of 2009, and the deferral of the $2 billion loan request previously planned for March. We look forward to working with the Task Force in completing a deeper, speedier and sustainable restructuring.
You can read a full copy of the March 30 GM progress report by clicking here.
Automotive Task Force Findings
Finally, after weeks of intense investigation, on March 30 the Presidents’ Automotive Task Force issued their findings related to General Motors. While not all of their findings about our viability were positive, they did call out several areas where progress has been made.
The following excerpt is taken directly from the Task Force document titled “Determination of GM Viability” dated March 30, 2009:
General Motors is in the early stages of an operational turnaround in which GM has made material progress in a number of areas:
- Purchasing: GM has organized its purchasing globally, with its purchasing organization taking advantage of GM’s global scale, and has put into place a rigorous, metric-oriented approach to drive supplier quality and cost improvements.
- Product design: GM has refined its product design process to create global vehicle platforms, thus allowing GM to reduce engineering costs and improve the content of its cars. These global platforms leverage the scale of the business and allow GM to amortize product development costs over a large range of models. GM has also, since 2005, focused on customer needs, interior designs, styling and quality to provide more attractive products. Examples of successes of this initiative include the 2008 North American Car of the Year Chevy Malibu and the 2008 Motor Trend Car of the Year Cadillac CTS (though they constitute a modest share of GM’s portfolio today).
- Manufacturing: GM has worked to create greater flexibility within its facilities, allowing for increased capacity utilization and an enhanced ability to spread its significant fixed costs across a broader car base.
- Brand rationalization: The recently announced decisions to divest or shut down Saab, Saturn and Hummer, while late, were important steps in reducing the Company’s brand portfolio and allowing it to focus its financial and human resources on a smaller number of higher quality brands.
- Dealer network: GM has been eliminating dealers from markets where it is oversaturated, as well as eliminating dealers who are either unprofitable or create a poor customer experience.
During the next 60 days, GM will continue to address the tough issues to improve the long-term viability of the company. We are fully committed to making this successful. We owe that to the GM community, to our customers, and to the U.S. taxpayers, who are providing support during this exceptionally challenging time.
As always, please feel free to call if you have any questions or ideas about how we can better work together to reach our common goal of building a stronger, more competitive American automotive industry.
I’ll leave off the names and phone numbers. I loved the part where GM mentions that “not all of their findings about our viability were positive”. No kidding. Maybe they should have done that viability study before investing $14 billion into GM, huh?
It seems more than strange when a private corporation has to issue status reports to the Senate rather than to its stockholders. Of course, the Senate arguably represents their largest stockholder, thanks to bailout mania.