×

FIRST ON CNBC: CNBC TRANSCRIPT: CNBC'S PHIL LEBEAU SITS DOWN WITH FRITZ HENDERSON, GENERAL MOTORS PRESIDENT & CEO TODAY ON CNBC'S "SQUAWK ON THE STREET"

Fritz Henderson
CNBC.com
Fritz Henderson

WHEN: TODAY, MONDAY, APRIL 27TH

WHERE: CNBC'S "SQUAWK ON THE STREET"

Following is a FIRST ON CNBC interview with General Motors President & CEO Fritz Henderson today on CNBC's "Squawk on the Street."

All references must be sourced to CNBC.

----------------------------------------------------------

LEBEAU: I'M PHIL LeBEAU LIVE AT GENERAL MOTORS HEADQUARTERS IN DETROIT MICHIGAN WHERE WE ARE JOINED FOR A FIRST ON CNBC INTERVIEW BY GENERAL MOTORS CEO FRITZ HENDERSON. FRITZ, YOU JUST LAID OUT YOUR RESTRUCTURING PLAN. THIRD ONE SINCE DECEMBER.WHY SHOULD PEOPLE BELIEVE THAT THIS IS IT, THAT YOU FINALLY HAVE IT RIGHT?

HENDERSON: PHIL, THE FEBRUARY 17th PLAN, WHICH WHEN THE ADMINISTRATION TASK FORCE LOOKED AT IT, THE CONCLUSION WAS WE NEEDED TO GO FURTHER, FASTER AND DEEPER. WHAT WE'VE DONE. WE PULLED FORWARD A LOT OF THE ACTION INCLUDED IN THAT PLANNED AND GONE DEEPER, DEVELOPED A PLAN BASED UPON A TIGHTER MARKET SHARE ASSUMPTION, FOCUSED ON FOUR CORE BRANDS AND FOCUS ON THE CUSTOMER. THE TREASURY AND TASK FORCE HAS UNTIL JUNE 1st, PLAN TO CONTINUE TO WORK WITH US, THEY WORKED WITH US UP TO THIS POINT.WE THINK IT'S AN AGGRESSIVE PLAN, DEVELOPS A BREAK EVEN POINT OF 10 MILLION UNIT MARKET HERE IN THE U.S., VERY ROBUST LEVEL OF BREAK EVEN FOR A COMPANY. WE THINK IT'S SUITABLE IN TERMS OF BOTH BEING AGGRESSIVE AND BEING FAST.

LEBEAU: SO BECAUSE IT'S MORE AGGRESSIVE YOU THINK YOU FINALLY HAVE IT RIGHT?

HENDERSON: WE CERTAINLY DO. BUT, AGAIN, WE'RE WORKING WITH A TASK FORCE BECAUSE THEY NEED TO REACH THEIR OWN JUDGMENT.THEY HAVE UNTIL JUNE 1ST. CERTAINLY FELT AS PART OF WATCHING THE BOND EXCHANGE TODAY WE NEEDED TO OUTLINE WHERE WE WERE ON OUR PLAN.

LEBEAU: LET'S TALK ABOUT THE DEBT EXCHANGE BECAUSE THIS IS GETTING A LOT OF ATTENTION ON WALL STREET.YOU HAVE THE BONDHOLDERS WHO HAVE LENT THE COMPANY ESSENTIALLY $27 BILLION.Y OU WOULD LIKE TO ELIMINATE $24 BILLION OF THAT. AND YET IN EXCHANGE, THEY'RE ONLY GETTING 10% EQUITY STAKE IN THE COMPANY.T HE UAW, THROUGH THEIR PAYMENT AS WELL AS THE TREASURY DEPARTMENT, ESSENTIALLY YOU GUYS ARE TRYING TO ELIMINATE $20 BILLION AND THEY WOULD COME AWAY WITH 89% OF THE COMPANY. AND FIRST, THAT DOESN'T SEEM FAIR. SOME PEOPLE ARE GOING TO LOOK AT THAT AND SAY WHY ARE THE PEOPLE WHO LENT YOU MORE MONEY GETTING A SMALLER STAKE IN THE COMPANY?

HENDERSON: I CAN'T REALLY EXPRESS OPINIONS AS TO WHAT IS FAIR OR JUDGE WHAT A BONDHOLDER SHOULD OR SHOULDN'T DO. WHAT THE PROSPECTUS DOES IS OUTLINE WHAT THE RECOVERY IS AND THE OPTIONS ARE IN THE EVENT WE AREN'T ABLE TO RESTRUCTURE OUT OF COURT. I THINK WHAT, AS WE LOOKED AT THE SITUATION, THE TREASURY INDICATED TO US THEY WERE NOT SUPPORTIVE OF A RECOVERY TO THE BONDHOLDERS IN EXCESS OF 10%.THAT'S WHERE WE LANDED IF WE LAUNCHED THE PROPOSAL ON THAT BASIS AND THE BONDHOLDERS HAVE TO MAKE A DECISION.

LEBEAU: SO ESSENTUALLY THE TREASURY INDICATED THAT 10% IS ENOUGH?

HENDERSON: NO, ACTUALLY, I'LL JUST REPEAT. WHAT THEY SAID IS GIVEN WHAT NEEDED TO BE DONE IN THE COMPANY, THEY JUST WEREN'T SUPPORTIVE OF A NUMBER HIGHER THAN THAT AND THAT'S HOW WE LAUNCHED.

LEBEAU: LET'S TALK ABOUT THE BRAND AND THE QUESTION OF WHY KILL PONTIAC. 10% OF YOUR SALES. LONG LEGACY IN THIS COUNTRY. SOME MIGHT LOOK AT WHERE PONTIAC IS AND SAY, WHY NOT KILL BUICK INSTEAD OF PONTIAC?

HENDERSON: ABOUT 85% OF OUR SALES HERE ARE ON THE FOUR CORE BRANDS, CHEVROLET, CADILLAC, BUICK AND GMC. A FAR HIGHER PERCENTAGE OF OUR AGGREGATE CONTRIBUTION MARGIN PROFITABILITY IS GENERATED FROM THE FOUR CORE BRANDS. IF YOU LOOK AT THE QUESTION OF PONTIAC, FOR EXAMPLE, YOU LOOK AT THE BREAKDOWN OF WHAT WAS IN THE SALES, FAIRLY HIGH LEVEL OF FLEET SALES, WHICH WE CAN FULFILL WITH OTHER BRANDS, NUMBER ONE. NUMBER TWO, WE COULDN'T DEVELOP A PLAN THAT WOULD BE ROBUST ENOUGH IN TERMS OF RESOURCES TO MAKE IT WIN AND BE PROFITABLE. BUICK IS A BRAND THAT DOES VERY WELL IN THE MARKETPLACE ON A RELATIVE BASIS, DOES EXTREMELY WELL IN CHINA.WE ARE DEVELOPING BUICK VEHICLES. HERE WITH RESPECT TO BUICK AND GMC, WE PROVIDE A DEALER AN OUTSTANDING OPPORTUNITY TO SELL A HIGHER PRICE, MORE PREMIUM VEHICLES FOR BOTH TRUCKS AN CARS.

LEBEAU: CAN YOU STAY NUMBER ONE, ELIMINATING THE FOUR BRANDS, CAN YOU STAY NUMBER ONE? IF YOU JUST STRIP DOWN THE SALESAT THE CURRENT RATE THROUGH THOSE FOUR BRANDS, YOU FALL BEHIND TOYOTA.

HENDERSON: THOSE -- THE NON-CORE BRANDS REPRESENT ABOUT THREE POINTS OF SHARE. AND IT RETAIL SHARE IF YOU LOOK AT '09 CALENDAR YEAR TO DATE. OUR VIEW IS, SOME PART OF THAT, SOME REASONABLE PART OF THAT FLEET SALES WHICH WE CAN FRANKLY CAPTURE THROUGH CHEVROLET WITH RESPECT TO THE REST OF THE SALE A FAIR NUMBER OF THOSE WE ACTUALLY EMPLOYEE MARKETS. RETIREES, EMPLOYEES, SUPPLIERS WHICH WE THINK WE WOULD BE ABLE TO SATISFY WITH OTHER BRANDS. I DO THINK WE CAN MAINTAIN A LEADERSHIP POSITION WITH FOUR CORE BRANDS. BUT CANDIDLY IT'S NOT MY OBJECTIVE. MY OBJECTIVE IS TO MAKE GENERAL MOTORS SUCCESSFUL. I'M NOT A BIG BELIEVER IN JUST FOCUSING ON BIG. WE NEED TO PRODUCE GREAT RESULTS, PERIOD.

LEBEAU: A BIG PART OF WHAT YOU'RE TRYING TO DO IS CLOSE 3600 DEALERSHIPS OVER THE NEXT TWO YEARS.

HENDERSON: UH-HUH.

LEBEAU: HOW DO YOU DO THAT GIVEN THE FRANCHISE LAWS OUT THERE? I'VE HEARD FROM SOME DEALERS WHO SAY, YOU KNOW WHAT, COME HELL OR HIGH WATER, THEY'RE NOT TAKING OUR DEALERSHIP?

HENDERSON: WE'RE GOING TO NOTIFY DEALERS. WE'RE GOING TO BE OUT HERE IN MAY, OUTLINING THEIR OPTIONS, OUTLINE HOW WE WANT TO WORK WITH THEM ON A REASONABLE TRANSITION PROCESS. AND ONE OF THE THINGS WE SAID VERY CLEARLY THROUGH THIS PROCESS IS THAT WE THINK THAT WE WANT TO RESTRUCTURE OUR BUSINESS OUTSIDE OF A BANKRUPTCY PROCESS. IF WE HAVE TO GO INTO BANKRUPTCY, WE WILL.THAT'S CLEAR. THE SITUATION TODAY. SO AS WE GO OUT TO THE DEALERS, THEY'RE GOING TO UNDERSTAND THAT, TOO. JUST LIKE THE BONDHOLDERS ARE. WE THINK WE CAN OFFER A FAIR PROPOSAL TO THEM. THOSE WHO WON'T BE US, AND THOSE WHO WILL BE WITH US, THE REMAINING OF THE 3600, HAVE A FANTASTIC OPPORTUNITY TO BE PART OF THE FUTURE.

LEBEAU: ARE MOST OF THE ONES TARGETING FORECLOSURES, YOU'RE LOOKING ABOUT PRIMARILY IN METRO OR URBAN AREAS?

HENDERSON: WELL LET ME BREAK IT INTO THREE PARTS FIRST YOU HAVE HUMMER, SAABS, SATURN, PONTIAC STANDALONE DEALERS, AND THERE AREN'T VERY MANY. WE NEED TO LOOK AT THEM AS PART OF THE BRAND RATIONALIZATION. TWO, WITH RESPECT TO METRO MARKETS WE ARE OVER DEALERED IN A LOT OF METRO MARKETS, AND NOT ONLY ARE WE OVER DEALERED WE ARE NOT IN THE RIGHT SPOT AND RIGHT OPERATOR SOMETIMES. WE NEED TO WORK IN THE MARKETS AND PROVIDE OFFERS TO THEM. WE DO HAVE A FAIR NUMBER OF DEALERS WHO SELL VERY FEW VEHICLES. WE HAVE, I THINK, 500 DEALERS WHO SELL LESS THAN 50 VEHICLES A YEAR, FOR EXAMPLE. I THINK WE CAN WORK THROUGH THESE THINGS RELATIVELY EFFICIENTLY.

LEBEAU: LAST QUESTION. 10 MILLION UNITS, CAN YOU MAKE AP ROFIT AND HOW QUICKLY CAN YOU MAKE A PROFIT.

HENDERSON: WE ARE REALLY SETTING ON AN EBIT BASIS, EARNINGS BEFORE INTEREST AND TAXES. WE COULD GENERATE A BREAK EVEN LEVEL AT 10 MILLION UNIT MARKET. THAT'S OUR OBJECTIVE WE'LL GET OUR STRUCTURAL COSTS DOWN TO ACHIEVE THAT.

LEBEAU: FRITZ HENDERSON, CEO OF GENERAL MOTORS.THERE YOU HAVE IT, GUYS.THEY UNDERSTAND A LOT OF CHANGEIS COMING BUT THEY BELIEVE THAT THESE ARE THE CHANGES, THE FINAL CHANGES THAT GENERAL MOTOR WILL HAVE TO MAKE ON A BROAD SCALE. GUYS, BACK TO YOU.

ENTER TEXT HERE



About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.