GM bets on technology and Cadillac to become 'most valued' automaker

DETROIT -- General Motors is counting on a parade of new technology-packed models to drive sales growth and profitability in North America and China over the next four years as part of an ambitious push to become the world’s “most valued” automaker by early in the next decade.The company’s China plan includes $14 billion in investments by its joint ventures to open five new auto assembly plants by 2018, with a goal of spurring sales in China to 5 million vehicles a year, from the current level of about 3.5 million. Also playing a big role in GM’s global strategy is Cadillac, which will introduce four new vehicles in North America next year, and nine new models in China over the next five years.GM shares rose 1.7 percent to close at $32.49 despite an overall down day on Wall Street. The automaker also said today its September U.S. vehicle sales rose 19 percent, just ahead of analysts' projections. By 2016, GM aims to achieve adjusted profit margins of 10 percent in North America, return to profitability in Europe by 2016, and maintain margins of 9 to 10 percent in China at the same time, said CEO Mary Barra, who outlined the plan at GM’s Proving Grounds here ahead of an investor conference.Barra said becoming highly valued would mean earning “customers for life” and creating “significant” value for shareholders. “We have the talent and global footprint” to accomplish that, she said.The comprehensive strategy is the first one laid out by Barra and her management team, which was put into place nine months ago following the departure of CEO Dan Akerson, but has been sidetracked by the company’s ignition-switch and recall crisis.Long-range plansIt arrives as two key rivals are laying out similar long-range plans. Earlier this week, Ford Motor Co. said it aims to increase global sales 52 percent to 9.4 million vehicles by 2020, and raise profit margins to 8 percent to 10 percent, from the current level of 8 percent. Ford also lowered its forecast for 2014 operating profit to $6 billion, down from a previous goal of $7 billion to $8 billion, citing higher-than-expected warranty and recall costs, and higher losses in Europe.Volkswagen AG, which is targeting sales of 10 million vehicles a year and a profit margin of 8 percent by 2018, is expected to outline a strategy for 2025 by the end of the year.In her presentation, Barra made few references to changing GM’s culture -- a frequent refrain since its 2009 bankruptcy reorganization, and a burning topic in the wake of the internal investigation into the ignition-switch debacle.But she described the kind of company she wants to run. She said she wants to “reignite innovation and ingenuity” and make a GM a company that “has the tenacity to win” and “the courage to do what’s difficult” -- qualities that contrast with the plodding bureaucracy GM has been known for in the past.In a morning briefing for reporters, Barra declined to detail how many vehicles GM plans to launch in the new few years, but said new or recently updated cars and trucks will make up 27 percent of global sales volume in 2015, increasing to 38 percent in 2016 and 47 percent in 2017.The new vehicles will feature advanced technologies ranging from automated-driving features, to a mixed-material body structure combining steel and aluminum, to new families of lighter, more compact and more fuel-efficient engines. “We want to be on the leading edge of new technologies," Barra said. Analysts react to GM plans“Mary Barra and GM's management team are clearly ready to move past this year's recall issues and focus on the job of advancing the automaker's long-term goals. Improved product lines in the United States and abroad, as well as increased global reach, will give GM an opportunity to grow its overall sales and profitability. Barra's long-term plan calls for an investment in connectivity and autonomous technology, two areas every automaker has to take seriously over the next decade to stay competitive. If Barra and her team can keep GM on the leading edge of this technology wave, while also managing fixed costs and maintaining the company's overall product competitiveness, they should be able to achieve the financial goals set forth in this plan.” -- Karl Brauer, senior analyst, Kelley Blue Book“GM's new management team, on the job since January but focused on the recall fiasco, is finally getting around to setting a future course for the company. They are finally seeing firm deadlines for goals, such as improving operating margins and turning around Europe, that before were vague. They also are laying out an aggressive schedule of new products and technology. Now the challenge will be for CEO Mary Barra and her lieutenants to stay the course and hold everyone accountable for meeting those goals. That's how now-retired Ford CEO Alan Mulally turned Ford around - with consistency, continuity, focus and accountability. In the past, GM has not held people accountable and has zigged and zagged on various courses. Let's see if this team will crack the whip.”-- Michelle Krebs, senior analyst, AutoTrader.com“Since emerging from bankruptcy, General Motors has based its comeback on superior products like the Corvette. Now the high-margin Tahoe, Suburban, Yukon and Escalade utilities will not only increase sales but contribute to larger overall margins. In this market, the battle is never ending as the new front will be in pickup trucks. Colorado and Canyon are projected to do well, but Silverado and Sierra will have to defend their ground against not only the new aluminum F-150 but also against a resurgent Ram truck. Still, it can be argued that the GM lineup is the most competitive that it has been in a long time.”-- Eric Ibara, director of residual value consulting, Kelley Blue Book More goals set

GM bets on technology and Cadillac to become 'most valued' automaker

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