General Motors chairman and newly-appointed temporary CEO Edward Whitacre plans to push the automaker to boost revenue, increase profit margins and gain market share quickly now that he has taken the reins, people familiar with his thinking told the Wall Street Journal (WSJ).
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Whitacre, described by the financial newspaper as “a tough Texan with little automotive industry experience”, has been GM chairman since the company emerged from bankruptcy reorganisation last summer, taking took over as interim chief executive on Tuesday after Frederick ‘Fritz’ Henderson resigned unexpectedly following weeks of tension between management and the board of directors.
WSJ sources said Whitacre wants top executives to develop a more aggressive business plan to put the automaker on the offensive in North America, despite the difficult economy and tough downsizing measures the company is taking.
Whitacre has said he believes GM must “accelerate the progress” toward returning to profitability and paying back the bailout loans from the US and Canadian governments.
He also recently made clear he was keen to see GM boost revenue and market share.
Sources familiar with the discussions between the board and Henderson told the paper they differed on GM’s ability to move faster and increase sales and margins, especially as GM is eliminating four brands – Pontiac, Saturn, Saab and Hummer.
“When you take brands out and cut dealers you really compromise your ability to maintain market share,” David Cole, chairman of the Center for Automotive Research, told the WSJ. “The most important thing is the product. Are the products contemporary? Are they delivered on time? Do they have competitive technology? The fact is that they do.”
The restructuring the auto maker endured through its bankruptcy sets GM up to be “an absolute earnings powerhouse,” Cole added.
Whitacre last month reportedly expressed concern about Henderson’s forecast of 11.5m vehicle sales for the overall US industry next year as being optimistic – Chrysler Group has based its financial outlook on a conservative estimate of 11m, a level at which GM would break even.
Whitacre said in August GM must not lose the top spot in US sales and charged Henderson’s management team with regaining market share after years of decline.
In subsequent months, Whitacre privately expressed frustration over GM’s reliance on profit-sapping sales incentives to move vehicles, sources familiar with the matter told the Wall Street Journal.
