Automaker General Motors Corp. (GMGMQ.PK), now known as Motors Liquidation Co. (MTLQQ.PK), on Wednesday issued details of workforce reduction, dealership consolidation and brand-building initiatives it has undertaken since launching the new company on June 10. The company also said separately that Mark LaNeve, its vice president, U.S. Sales, is leaving.
In an update on the progress it has made in the 90 days towards achieving commitments in its business plan, the Detroit, Michigan-based automaker said its salaried employee count has been reduced to 24,300 as of October 7, 2009, from 29,700, as of 2008-end, or 18.2%. In the same comparative periods, GM's hourly employment was reduced to 49,200 people from 62,000 people, or 21%.
The company said it continues to consolidate U.S. dealers through wind-down agreements, including Pontiac and Saturn dealerships. The company is trying for a more competitive dealer distribution structure, with about 5,800 dealers at the end of the third quarter, down from about 6,375 dealers at the end of 2008.
The company has embarked on certain new projects as part of its international expansion, including a collaboration agreement with Reva Electric Car Co. in India and setting up its China Science Lab in Shanghai.
GM said it has made further progress on the sale of Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd., and reached agreement with Koenigsegg Group AB to purchase Saab.
GM said it is also working to close the sales transaction of a majority stake in Opel/Vauxhall. As part of the resolution to the Delphi bankruptcy, GM recently acquired Delphi's global steering business and four key U.S. Sites.
GM said consumer reaction to its newest vehicles is positive. In the U.S., newly launched vehicles exceeded sales expectations in September. According to GM, the Daewoo Matiz Creative launched in South Korea last month has helped double GM's market share in the mini segment in that country within the first three weeks of sale. The Chevrolet Volt extended-range vehicle remains on track to begin production in late 2010, the company added.
As of September 30, dealer inventory was 424,000 units with 81 days supply, down from 582,000 and 99 days supply at the end of the second quarter. GM intends to continue to align production tightly with demand and is increasing fourth quarter North America production to help rebuild the supply of vehicles in high customer demand.
GM's preliminary global market share in the third quarter was 11.9%, up 0.3 percentage points from 11.6% share in the first half of the year, compared to 12.4% in 2008. The company's U.S. market share was 19.5% in the third quarter, consistent with the first half of the year. U.S. market share in 2008 was 22.1%.
In the last 90 days, Pontiac Assembly and Wilmington Assembly ceased operation, as previously announced. By year-end 2009, GM intends to reduce the number of operating plants in the U.S. To 41 from 47 in 2008, excluding the component plants recently acquired from Delphi.
Last month, GM had said that it would add a third shift at three of its production facilities in the U.S., and also restore a total of 2,400 jobs at these plants to increase its manufacturing plant utilization.
According to GM President and CEO Fritz Henderson, "Over the past ninety days since we created the new GM, we've already launched a number of new, fuel-efficient, highly successful cars and crossovers; introduced a new marketing campaign that highlights our best-in-class fuel economy, quality, warranty and safety performance; sworn in a new Board of Directors; and overhauled our management. We are taking aggressive actions and moving quickly to transform our culture into one that is truly customer focused."
However, many of the recorded achievements reportedly fall short of targets. In spite of the planned reductions, GM will reportedly have about 10,000 more U.S. workers by year-end than it should by its plan. Also, the company was to finalize the Hummer sale deal by September 30. GM's plan to sell Saturn also did not carry through.
Looking ahead into 2010, The company said it would continue to promote its full range of vehicles with special attention paid to new launches. GM intends to maintain an intense focus on business performance, improving cash flow and EBIT. The company intends to grow revenues through stabilization of market share in the U.S. and growth in important markets like China and India.
As a new company, GM said it is continuing to implement "fresh-start" reporting and is continuing to prepare for an IPO as soon as practical.
However, GM noted that challenges still remain, including uncertainty in the rate of recovery of the U.S. economy and the auto industry, the company's ability to continue rebuilding consumer purchase consideration and completing the remaining structuring actions.
"We've made a lot of progress in 90 days, but we don't think for a second that we can begin to ease off the accelerator. We have been granted an extraordinary second chance to reinvent this company. We are driving hard to change the way we interact with our customers, to ensure our new cars and trucks are the best in their segment, and to change the way we operate and how think about the business. We need to prove ourselves every day, and we will," Henderson added.
GM is expected to release financial results for the third quarter in the middle of November.
Additionally, the company named Susan Docherty, 46, currently general manager, Buick-GMC, as vice president, U.S. Sales, effective October 16. She will also become a member of the executive committee. Docherty replaces Mark LaNeve, who announced his departure to a non-automotive company.
Previously, Docherty had been named to lead the Buick-Pontiac-GMC Channel in June 2008. Prior to this assignment she had been general manager for the Western Region, taking the position in September 2006.
According to Henderson, "Susan will bring a wealth of experience from previous marketing and sales assignments. I have confidence that she will bring a new perspective to the position as she guides a new, lean, and customer-focused dealer network."
GM said it would look outside to fill the Buick-GMC general manager position.
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