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General Motors Message to the Markets: Still Stings to be Called 'Government Motors'

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General Motors investors fled the stock Tuesday as reports of the U.S. government planning to sell the majority of its remaining stake in the automaker this year. Shares fell by approximately 1.3 percent to end the session at $29.59.

In order to break even, the government would have to sell 500 million shares for $53 a piece but with the stock price around $30 a share, it will take a huge pop in the stock in order to achieve that.

When speaking with my sources in the auto industry, they give the resurgence of General Motors a resounding thumbs up and they applaude the government stepping in and puttting money into the company.

But does the veil of "Government Motors" still hang over the automaker? Some of my auto sources say yes and its not right. I asked Bob Ferguson, Vice President for Global Public Policy at General Motors, about this as well as his outlook on the road ahead.

LL: General Motors financial management and poor products were considered to be the two biggest causes for the company's 2009 collapse. The company has successfully made a 180. What is the first thing that comes to your mind when some people still call GM "Government Motors"?

BF: Yes, we've made terrific progress in getting our cost structure at a competitive level, strengthening our balance sheet, getting our operations - both manufacturing and dealer network—to a size that matches the market, and most importantly, offering a strong line up of cars and trucks that are winning new buyers. The result is we're seeing a return to sustained profitability and increased sales and market share. But, we're not resting for a second. From new leadership within the executive ranks to the men and women on the assembly line, there's a deep resolve to keep this progress going and repay the taxpayer.

So, it does sting when we continue to hear references to "Government Motors"—especially after pulling off the world's largest IPO that reduced the Treasury's stake to a minority level. To both Administrations' credit, we've been free to make the hard business and commercial decisions to run our business to compete and win in an intensely competitive industry. We recognize it was a tough and unpopular decision to give us a second chance.

But, we believe if we can keep the momentum going, and when the Treasury ultimately decides to share their remaining stake, that phrase will gradually go away as part of some of the political commentary. We want the market to judge our cars and trucks on their merits. On that level, we know we can win.

LL: Many of my sources say the U.S. automakers are at a tipping point and have a chance of taking market share back from Toyota and the other Japanese manufacturers as the company tries to get back online after the devastating earthquake and tsunami and the stronger Yen.

Your Chevy Cruse has been received extremely well and your smaller Spark is due out later this year. What's your outlook in terms of picking up market share? (some analysts are predicting 2-3 percent for GM)

BF: Market share is an important indicator of the health of a company's brands and marketplace acceptance. Since we became a new company, we've launched 12 all-new or refreshed models. The early returns would point to us hitting the mark with these new vehicles and buyers are switching from our competitors. Since the introduction of these new models, our share of the market grew 1.6 points in 2010.

So far this year, our share is up about a full point through March.

Looking ahead, while we won't predict our share, our goal remains the same as it has always been —to sell as many vehicles as we can and to do so, profitably.

The all-new Chevrolet Cruze is a good example, climbing the charts in the tough compact segment selling 203 percent more in the first three months of the year, compared to the Cobalt it replaces. Better yet, it is transacting near the top in its segment with the lowest incentives. And, with the launches of two, American-built sporty fuel-efficient cars, Chevrolet Sonic and Buick Verano later this year, we're in a good position to bring even more buyers into the Chevy and Buick folds.

LL: Are you concerned with the slow rebound in consumer spending and the rising price of oil impacting the recovery of the auto industry?

Do you think your products can compete as gas prices rise, some in the industry say the GM does not have enough small new products ?

BF: Consumer confidence and gas prices remain the two significant factors that affect the industry's prospects. Currently, we haven't seen any dramatic market shifts as most consumers were moving toward more fuel-efficient products since the last gasoline price shock which occurred in the aftermath of Hurricane Katrina.

At GM, we were already making the move in our product portfolio to adjust to that market shift. That's why we believe we are better positioned than ever to weather both the short-term volatility in fuel prices and the long-term climb that most analysts expect to accompany global growth.

Our product lineup is significantly more fuel efficient than it was just even a few years back as we now offer high efficiency products in most high volume segments. Of course, the Volt gets a lot of attention, but the Chevrolet Cruze Eco's 42 mpg EPA rating on the highway makes it tops among any gasoline engine car sold in the U.S.

For families, our small crossovers, Chevy Equinox and GMC Terrain offer 32 mpg on the highway. And, if you're a small businessman or contractor, our full-sized pickups get 22 mpg - the best in class for a V8 workhorse. We have more new cars, trucks and technologies to come that will deliver what customers want and need while reducing the number of trips to the gas pumps.

LL: GM announced it was going to add a second shift for Volt Production starting in early 2012. Any chance of moving that time table up? Also what happens to sales when the government rebate runs out..can you bring the cost down so its competitive?

BF: Our immediate focus is on meeting current strong demand. We'll build 10,000 Volts this year and expect to sell every one. The Volt's "day's supply" — industry speak for the time the car spends on a dealer's lot before it's bought—is about 10 to 15 days, or just enough time to do the dealer prep and fill out the paperwork before a customer drives off with it.

As you would expect with that level of demand, we're looking very hard at how to increase production for next year. Our plans are to build 45,000 Volts next year, but stay tuned.

In addition to looking at ways to increase production, we're also hard at work on taking more cost out of the Volt. This approach is no different than how we look at all of our business. In other words, we're always looking at making our cost structure more competitive and yet delivering the features and performance a customer wants in our cars and trucks. It's a tough balance to achieve, but our recent performance indicates we're making progress and I'm confident we can do better—and this includes the Volt.

Certainly, the tax credit helps push the consumer toward a purchase. This has proven true with any new technology that enters the market and until volumes and other advances bring the price down. And, the Volt is no exception in this regard. The tax incentive can certainly make a difference in keeping demand hot and getting more of these types of advanced technology vehicles on the road quicker.

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."