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July 28, 2006

Turnaround Momentum Drives GM in the Right Direction

Editor's note: While FastLane is typically dedicated to discussion about GM products and services, Chairman and CEO Rick Wagoner has chosen to use this forum to update you on GM's turnaround progress.

By Rick Wagoner
Chairman and CEO

As I commented to financial journalists earlier this week, conventional wisdom holds that you can’t turn a ship as big as GM around quickly. We aim to prove that conventional wisdom wrong.

Our second quarter earnings report pleasantly surprised a lot of folks who are following GM’s turnaround progress in North America. Even some of our harshest critics were impressed.

Putting the financial mumbo-jumbo aside, what the numbers show is that our turnaround plan for North America is well on track and building momentum.

Lots more hard work and several big challenges remain in front of us, but I’m pleased with how much already has been accomplished in the past year. I’m very appreciative of GM’s employees, unions, dealers, suppliers and stockholders’ willingness to pitch in and help get the business back on track. It’s just starting to pay off.

You may have seen some headlines that said GM reported a net loss of $3.2 billion for the second quarter. That’s true. We booked several “special items,” which included a one-time $3.7 billion charge related to our successful hourly employee attrition program. A total of 34,400 employees took advantage of the buyouts, which are intended to help them make the transition to another line of work or early retirement.

Beyond cutting costs, we need to keep up our recent momentum in growing revenue with exciting cars and trucks. Based on the new vehicles in our “product pipeline,” there are plenty of reasons to be optimistic on that front as well.

Although it hasn’t been fully recognized yet in the business media, there are strong signs that GM’s already well on the way toward a product-led resurgence.

Dig into our most recent sales results, and you’ll see that in June our retail sales and market share were the strongest they’ve been all year. Our newly launched vehicles are selling very well, led by our new full-size SUVs, the Chevy Impala and HHR and Pontiac G6. The hot Pontiac Solstice and Saturn Sky roadsters are essentially sold out for this year.

The Saturn Aura midsize sedan and Saturn Outlook and GMC Acadia crossovers, our new full-size Chevy Silverado and GMC Sierra pickups, as well as the Saturn Vue Green Line — the nation’s most affordable hybrid SUV — will all debut through the second half of this year, and help build upon this recent growth.

Sometimes lost in all the attention paid to GM’s challenges in North America is the remarkable progress we’re making in the major growth markets elsewhere in the world. Our sales in Europe are strong and earnings there continue to rise. Our region that includes Latin America, Africa and the Mideast also has grown significantly; its earnings more than quadrupled in the second quarter versus a year ago. And in the Asia Pacific region, we continue to lead in the world’s fastest-growing market, China, and to rapidly expand sales at GM Daewoo in Korea.

We recognize that our most recent financial and sales numbers, while promising, aren’t enough to declare our turnaround a success quite yet. But we know what has to be done to get our North American business back on a solid footing, and we’re doing it.

Posted by Editor at 12:46 PM
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July 18, 2006

In Celebration of Corvette Racing

By Ed Peper
Chevrolet General Manager

We have a phrase at Chevrolet that sums up our feelings for GM's largest division: “Chevy Proud!” I was Chevy Proud when we outsold Ford in 2005 to become the best-selling brand in the U.S. And I was Chevy Proud today when we celebrated Corvette Racing's fifth win in the GT1 class at the 24 Hours of Le Mans with a parade through the streets of downtown Detroit.

In years past, it might have been a tickertape parade, but both tickertapes and office windows that open are only memories now. But we did celebrate the occasion with hot dogs, ice cream, American flags and fast Corvettes – a heartfelt homecoming for America's team in international road racing.

The 24 Hours of Le Mans is simply the biggest, most prestigious and most important road racing event in the world. Although the race is not as well known in the U.S. as the Indianapolis 500 or the Daytona 500, it's the "Big One" in the rest of the world. This year's race was covered by 2,200 journalists from 37 nations, seen by nearly a quarter of a million spectators, and broadcast to a worldwide TV audience. For Corvette Racing to win Le Mans five times in the last six years is huge.

The Le Mans race track is located 125 miles southwest of Paris. It's an immense course, nearly 8.5 miles long, which combines a dedicated circuit with two-lane country roads. The 24 Hours of Le Mans is a race that's steeped in history and tradition.

We often hear from the critics what is wrong with the auto industry, but Corvette Racing shows what's right. We’re proud that Corvette competes and wins on the global stage. Today we applauded the accomplishments of the men and women of Corvette Racing, and we saluted the teams that work behind the scenes at General Motors and our affiliated sponsors and suppliers to make Corvette Racing a world-class team.

A great race car begins with a great production car. In fact, the rules at Le Mans insist that manufacturers in the GT classes adhere closely to production specifications. One look at the Corvette Z06 supercar and the Corvette C6.R race car shows the two-way transfer of technology between racing and production that benefits our customers.

The street car is better because of the race car, and the race car is better because of the street car. Most importantly, our engineers are better because of the interaction between the race team and the production team.

A big reason why Chevy is the most successful marque in motorsports is the GM small-block V-8. It’s the world's most successful production-based racing engine, and it has powered Chevrolets to victory in NASCAR, drag racing and road racing for more than 50 years. In fact, the small-block V-8 is so strong that the sanctioning body for the American Le Mans Series recently handicapped the Corvettes so that our competition's multi-valve, overhead cam V-12s can keep up with us!

I felt a tremendous sense of pride as I drove a Corvette convertible behind one of the Corvette C6.R race cars from the headquarters of Compuware Corporation to the GM World Headquarters at the Renaissance Center. To have Corvette winning at this level of international competition is the fulfillment of the dream of Zora Arkus-Duntov, the first Corvette chief engineer. Corvette has long been known as an American icon, but now Corvette is recognized globally as a world-class performance car, due in part to our success at Le Mans and in the American Le Mans Series. We were joined by an enthusiastic group of Corvette owners from local clubs. It was clear why they love their Corvettes.

It was my privilege to present the 24 Hours of Le Mans trophy to Peter Karmanos Jr., chairman and CEO of Compuware Corporation. As the primary sponsor of Corvette Racing, Compuware's partnership and support has made Corvette Racing's success possible. Mr. Karmanos is building an impressive trophy collection; he is also the owner of the Carolina Hurricanes hockey team that won the Stanley Cup last month.

I can't imagine a better way to celebrate Corvette's 50th anniversary in international road racing than with this victory at Le Mans. Corvette Racing is continuing a tradition of winning that began in 1956 at Sebring. Through the years, Corvette has remained true to its sports car and racing heritage as an All-American performance icon.

And that makes me Chevy Proud!

To see more photos from the parade, check out our Flickr page.

Posted by Editor at 4:04 PM
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July 14, 2006

Summer Update

By Bob Lutz
GM Vice Chairman

As usual, summer is speeding by us in sixth gear, and despite GM North America taking its traditional “summer shutdown” in the first week of July, we’ve all been pretty busy around here. In the last month I have visited several corners of the far-flung GM universe, including another trip to Europe to meet with the product development team in Germany. There are some very exciting things happening there that unfortunately shall not be blogged about yet, but stay tuned.

One of my favorite recent trips was to North America’s own little slice of Europe, Quebec. I met with French-Canadian media in Montreal, which, as usual, was both fun and enlightening. They’re a smart bunch, and it’s amazing how sincerely appreciative they are for the simple act of communicating with them in their own language.

The trip to Canada reinforced for me that virtually every market I visit is different, even within the same continent. One of GM’s strengths is that it has product to suit almost every market. Our small cars for Quebec are proof positive of that. It’s a very important market for us and I try to remind them of that every time I go up there.

One last thing… Something else I’ve managed to do during this period is check on this blog, and I have read the saga of Dan Cadigan, the remorseful Honda shopper whom many of you have read about and responded to on this blog.

Dan, I know that my staff has contacted you, but I feel compelled to let you know that I personally appreciate your loyalty and the emotional connection to the American auto industry you have demonstrated. I truly believe if you take a look at the Saturn Aura, you will find exactly what you need. Or, if you can hold off until the Saturn Outlook is launched, you can get one of the best-executed seven- to eight-passenger crossovers on the planet, and bypass the minivans you wish to avoid.

As for your comments about the cars you saw in our dealerships, the Pontiac G6 is one of the highest quality cars available, and it’s routinely at the top of independent owner satisfaction rankings. If the “torque steer” on the V8 Impala is objectionable, try the very harmonious and economical V6 model. Either way, I respectfully disagree with your assessment of Impala’s “cheap controls” — those knobs and switches match the best from Germany or Japan, in my opinion. But don’t just take my word for any of this; go to Edmunds.com and read some of their readers' experiences, especially those posted by owners of the Buick Lucerne vs. owners of the Toyota Avalon.

Whatever you decide, I thank you for your consideration, and for the depth of your affection for GM and the domestic industry. I hope we can provide the vehicle you need.

Posted by Lutz at 9:42 AM
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July 12, 2006

Introducing the Acadia

By John Larson
General Manager, Buick-Pontiac-GMC

UPDATE: Take a look at our FYI blog for more photos from the unveiling yesterday with Ed Welburn, VP of global design.

We at GMC got to show off our first crossover vehicle to journalists in Hollywood today. It’s called the Acadia, and for the first time pairs the versatility of a small utility vehicle with the “Professional Grade” standards of GMC.

Crossovers are the fastest-growing vehicle segment in the U.S., with nearly a million sales last year. And because we expect that number to grow by another million by 2010, General Motors will double the number of our crossover entries by then. Right now, the GMC Acadia is our eighth crossover, joining the Chevy Equinox and HHR, the Pontiac Torrent and Vibe, the Saturn Vue, the Buick Rendezvous and the Cadillac SRX. We believe the Acadia will bring new customers to GMC showrooms.

Take a look at the photos, but here’s a bit more about the Acadia:

• Body-frame-integral design, long wheelbase and low center of gravity provide a smooth ride and responsive handling.

• The 3.6L V-6 with variable valve timing and new 6-speed Hydra-Matic 6T75 automatic transmission balance fuel economy with power. Towing capacity is 4,500 pounds, and estimated fuel economy is a competitive 17/25 for the FWD and 17/24 for AWD.
• Up to eight adults can sit comfortably in its three rows, including heating and air conditioning in the third row. The second and third rows fold to create a flat load floor.
• Six air bags are standard equipment: two in the front, two side-impact air bags in the first row, and two roof rail air bags that cover all three seating rows.

The Acadia will be produced at our Lansing Delta Township plant, and will be available at dealerships late this year. Let me know what you think of it.

Posted by Editor at 5:05 PM
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