General Motors Company launched, wants to be lean, mean and profitable

The new General Motors Company will, in the US, focus on four core brands - Chevrolet, Cadillac, Buick and GMC - and will consolidate its manufacturing operations in a big way

The new ‘General Motors Company’ (GMC) began operations yesterday, with a new corporate structure and a stronger balance sheet. ‘Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers,’ said Fritz Henderson, president and CEO. ‘Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors.’

The new General Motors Company is now primarily owned by the governments of the United States, Canada and Ontario, and by a trust fund providing medical benefits to UAW retirees. Specifically, common stock will be owned by US Department of the Treasury (60.8%), UAW Retiree Medical Benefits Trust (17.5%), Canada and Ontario governments (11.7%) and the old GM (10%).

The new GM is built on four core brands (Chevrolet, Cadillac, Buick and GMC) in the US and has the largest, strongest car dealer network in the country, which will now offer a fresh line-up of cars, trucks and crossovers. According to GMC, the company will have a competitive cost structure, a cleaner balance sheet and a stronger liquidity position that will enable GM to invest in new products and key technologies.

The new GM wants to be much leaner than how it’s been in the past. In the US, by the end of 2010, the company will operate only 34 assembly, powertrain, and stamping plants, down from 47 last year, and capacity utilization is expected to reach 100% during 2011. Earlier this year, the company also accelerated its dealer consolidation efforts, with the goal of reducing the number of GM dealers in the US from 6,000 to approximately 3,600 by the end of 2010. Even so, GM will still have the largest dealer network in the US.

GM’s subsidiaries outside the United States – including GMI, the Indian arm – were acquired by the new company and are expected to continue to operate normally without any interruption.

‘Today we launch the new General Motors, and our promise is simple. We will be profitable, we will repay our loans as soon as possible, and our cars and trucks will be among the best in the world,’ said Henderson. ‘We recognize that we’ve been given a rare second chance at GM, and we are very grateful for that.’

In the meanwhile, while GM was busy restructuring and coming out of bankruptcy, Ford was, it seems, forging ahead with the business of selling cars. For the first time since 1931 - almost eight decades - Ford might inch ahead of GM this year in terms of total sales volumes in the US. According to analysts in the US, Ford might get ahead of GM because the latter is shutting down its Pontiac brand, which will result in significant loss of sales for GM/new GM.