US: GM restructure funds to speed model launches
General Motors will use some of funds remaining after its Chapter 11 bankruptcy restructure to speed up important new model launches to recapture lost market share, chairman Ed Whitacre said soon after his first meeting as chair of the 'new GM' board.
Directors told the automaker to advance the start of production of some planned new models, Reuters reported.
Deutsche Bank analyst Rod Lache has told the annual auto industry conference in Traverse City, Michigan, the restructuring produced a GM that could return to profit as early as 2011 after costs and debt were reduced. He also predicted rival Ford could reach break even later this year because the Detroit-based automakers could now make money on much reduced production volumes after reducing their costs significantly.
"It's important to us that we improve our market share. That translates to the top line, and that is important to this company," Whitacre told Reuters. "We need to improve the number of vehicles sold."
GM chief executive Fritz Henderson recently streamlined GM's senior management with new appointments and retirements.
"Fritz and I talk almost every day. The board unanimously supports him," Whitacre said. "He certainly has our blessing and encouragement. He knows what the board expects from him. He's enthusiastic. He's a smart guy, and we think he can get the job done. He's going to run GM."
"We have a profitability plan and I think we'll surprise some people with how quickly we get there," Whitacre said of the automaker which lost $82bn in the last four years.
"I think the imperative to grow is a very important imperative. It brings a lot of positive changes," US government autos task force head Ron Bloom told the news agency in Traverse City. "We are hopeful the company can grow."
Whitacre would not say which models GM was targeting for faster production.
Reuters noted the move to spend more now on vehicle launches reversed GM's stance dating back to late last year when it began delaying projects in order to conserve cash.
Recent launches included the redesigned Buick LaCrosse and a new Cadillac line.
GM took a 19.5% share of the US market in the first seven months of 2009 but that included the Saab, Hummer and Saturn brands it plans to drop.
"We're not going to draw a line in the sand and try to fight it out there. We're going to try to improve (market share)," Whitacre said.
Reuters said the move was the first GM decision on how to use government funds remaining in an account earmarked for the turnaround - it contained about US$20bn at the time GM emerged from bankruptcy last month. GM executives have said another potential use for the funds would be to make a payment this year against its projected pension shortfall.