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| General Motors CEO Mary Barra talks with media Wednesday, October 1, 2014, before outlining the company's customer-focused strategic plan to become the most valued automotive company, at a conference for investors and financial analysts at the General Motors Milford Proving Grounds in Milford, Michigan |
General Motors Co. (NYSE: GM) CEO Mary Barra and her executive leadership team outlined the company’s customer-focused strategic plan to become the most valued automotive company at a conference for investors and financial analysts today at the company’s Milford Proving Ground.
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| GM CEO Mary Barra |
“In the nine months that this leadership team has been together, we have spent a significant amount of time setting our goals for the future of GM and developing a specific action plan,” Barra said. “Our strategic plan is a pathway to earn customers for life and create significant shareholder value in the process. Every chance to connect with a customer is an opportunity to build a stronger relationship.”
GM’s strategic plan includes several major initiatives that the company anticipates will help it achieve 9- to 10-percent margins on an EBIT-adjusted basis by early next decade.
- Lead in Product and Technology: In 2015, about 27 percent of GM’s global sales volume is expected to come from products new or refreshed within 18 months. That figure is expected to rise to 38 percent in 2016 and 2017, and reach 47 percent in 2019.
During the same time frame, GM plans to execute the world’s largest automotive deployment of 4G LTE high-speed mobile broadband, introduce vehicle-to-vehicle connectivity in the 2017 Cadillac CTS and launch a highly automated driving technology currently called Super Cruise, which allows for extended periods of hands-free driving on highways.
GM has also developed an innovative Mixed Material Body Structure that uses GM-patented welding technology and a combination of steel and aluminum stampings, castings and extrusions to deliver designs that are lightweight, use 20 percent fewer parts, have class-leading torsional stiffness and exhibit superior noise and vibration characteristics.
- Grow Cadillac: GM is establishing its flagship brand as a
separate business unit headquartered in New York City to pursue growth
opportunities in the luxury market with more focus and clarity. Cadillac
expects to introduce four new vehicles in North America in 2015,
including the recently announced CT6. In addition, Cadillac plans to
introduce nine new models in the next five years in China, which is
expected to become the world’s largest luxury car market later this
decade.
- Continue Growing in China: GM’s joint ventures in China are
planning to invest $14 billion from 2014 through 2018 to open five new
vehicle- manufacturing plants and support sales of just under 5 million
vehicles annually. In the same time frame, GM expects to launch 60 new
or refreshed vehicles, including nine new sport utility vehicles.
- Continue Growing GM Financial: GM Financial, which has seen its
earning assets grow from $8.7 billion in 2010 to $37 billion today,
continues to invest to support the sale of new GM cars, trucks and
crossovers around the world. GM Financial has sharply increased the
number of GM customers it serves in the United States, Canada, South
America and Europe. Later this year, GM Financial expects to enter the
growing Chinese market.
- Deliver Core Operating Efficiencies: GM’s strategy to improve
relationships with suppliers, derive more global volume from fewer
vehicle architectures and lower enterprise costs for material and
logistics is expected to deliver significantly better variable margins
on upcoming high-volume product launches, including the Opel/Vauxhall
Corsa and Astra in Europe, and the Chevrolet Cruze and Malibu in North
America. By 2020, the company expects that about 99 percent of global
production will be on core architectures.
Mid-decade Financial Targets
During the meeting, GM also reaffirmed the company’s previously announced near-term financial targets:
- In North America, the company expects to achieve EBIT-adjusted margins of 10 percent in 2016.
- In Europe, the company expects to return to profitability in 2016.
- In China, the company expects that its joint ventures will maintain net income margins in the 9- to 10-percent range.
- In South America, the company’s core operations continue to improve
as a result of recent product launches and material and logistics
optimization.
- GM continues to address challenges in its international operations
outside of China, including brand strategy, cost structure and sourcing
to return to consistent profitability.
GM intends to return excess cash flow to stockholders primarily through strong and growing dividends based on sustained improvements in the company’s underlying financial performance.
