In the five years since GM exited bankruptcy, the company has gone a long way toward righting itself, which gives Barra room to maneuver. Its retail market share (excluding sales to fleet customers) has improved, while average transaction prices are up $2,000 compared with a year ago. On Wall Street GM’s credit rating improved to investment grade, lowering its cost of borrowing. Chevrolet, the carmaker’s largest brand, sold a record 5 million vehicles last year, while GM also set a sales record in China, the world’s largest market. Since 2009, GM has invested $10 billion back into the U.S. economy.
While 2014 will see only modest growth, Barra is sticking with Akerson’s mid-decade targets to achieve a 10% operating margin in North America, boost annual sales in China from 3.2 million to 5 million vehicles and restore profits to mid-single digits in South America and China, despite currency headwinds and economic turmoil, along with GM’s own inefficiencies. To get it done, she’s begun flying in her global leadership team for monthly meetings–not only to hash out important strategic decisions, but to also make sure they get to know one another better.
GM continues to perform well in the U.S. and China, its two largest markets. Her plan is to use profits from those markets to restructure and make the investments necessary to grow profitably in other parts of the world. That task falls to President Dan Ammann, who is crisscrossing the globe, trying to find ways to share more products and expertise. At the same time, GM’s executive vice president for international operations, Stefan Jacoby, is tailoring GM’s product portfolio by country to meet consumer demand, rather than trying to compete on the fringes with irrelevant products.
In Europe, where GM’s fresh start in the U.S. coincided with an economic collapse, the company is in the midst of restructuring, including a plant closing in Germany under new president Karl-Thomas Neumann, a former Volkswagen executive. GM toyed with selling its Opel division to concentrate on expanding Chevrolet in Europe, then thought better of it, and is now beefing up Opel’s lineup again. After $18 billion in losses since 1999, GM is now trying to break even in Europe by mid-decade.
Barra will also need to negotiate a new national contract with the United Auto Workers in the U.S., which will be looking to restore some of the benefits it lost when GM was in bad shape. Fortunately, the recall headlines haven’t hurt sales at home. In April, GM outperformed expectations, with sales up 7% from a year ago, and increased its retail market share from March. Analysts like J.P. Morgan’s Ryan Brinkman think–perversely perhaps–that the current spate of recalls might actually help sales of new GM models by driving more customers to dealerships to get their old cars fixed.
One thing Barra knows for sure: Painful as the recall has been, the crisis is an opportunity to finally break through the vestiges of the “old GM” that have hindered its performance in the past. “I really feel–obviously we want to do the right thing and serve the customer well through this–but it’s also an opportunity to accelerate cultural change.”