Leaner General Motors Hopes to Win Over Consumers

10 July 2009

The U.S. auto giant General Motors emerged from bankruptcy Friday, and GM officials announced extensive changes designed to win back consumers and restore the luster of what has long been one of the country's most prestigious corporations.

General Motors Corp. CEO Fritz Henderson addresses the media during a news conference at the company's headquarters in Detroit, Mechigan, 10 Jul 2009
Fritz Henderson addresses the media during a news conference at the company's headquarters in Detroit, Mechigan, 10 Jul 2009
After 40 days of bankruptcy, Chief Executive Fritz Henderson told a news conference in Detroit, Michigan, that a new, leaner and more competitive General Motors is now emerging, with the help of $50 billion in U.S. government loans.

"This is an exciting day for General Motors," he said. "Today marks the beginning of a new company - our company - one that will allow every single employee, including me, to return to the business of designing, building and selling great cars and trucks and serving our customers."

GM was able to move out of bankruptcy more quickly than many analysts had predicted.

In an effort to remake the company, GM officials announced some big changes including a 35 percent cut in its executive work force and the dropping of some car and truck brands that had long been staples in automotive showrooms including Saab, Saturn, Opel, Pontiac and Hummer.

GM chief Henderson says the focus of the new General Motors will be giving consumers products that they will want to buy, including more efficient hybrid fuel vehicles, and a re-emphasis on core brands like Chevrolet and Cadillac.

"At the new GM, we need to make the customer the center of everything, and we are going to be obsessed with this, because if we don't get this right, nothing else is going to work.  It's that simple," he said.

Henderson says that among the innovations GM will experiment with is a partnership with eBay, the U.S. auction and commerce Internet site, so that customers can buy their cars on-line.

"Consumers will be able to actually bid on vehicles just like they do in an eBay auction, including the option of a predetermined 'buy it now price.' Think of it as a physical auction for dealers reinvented for the on-line consumer," he said.

Last month alone, GM sales were down 34 percent. University of Detroit marketing expert Mike Bernacchi says General Motors has some work to do to win back the confidence of American consumers.

"General Motors has gained a reputation for not listening to the public," he said. "This new, brave General Motors has to establish that it is listening to the public."

But auto industry analyst Katie Kerwin says the GM makeover could prove to be an important step forward on the road to recovery.

"They have got all their ducks in a row in terms of how the company should be structured," she said. "They have got low debt, they have got everything kind of pared down to the essentials, and what remains now is for them to make it work, for them to make the right decisions to develop the right product."

The emergence of the new General Motors from bankruptcy is the culmination of an unprecedented effort by the U.S. government to shore up the faltering American auto industry.

The Obama administration has spent nearly $80 billion to help automakers, including $50 billion earmarked for GM.

GM Chief Henderson says the company intends to pay back those government loans long before the repayment deadline of 2015.