Even after emerging from bankruptcy protection, the new General Motors still faces some of the same troubles that haunted the old one, which piled up more than $80 billion in losses during the past four years and still needs government aid to survive.
So how does a company that has not made money since 2004 get back to turning a profit?
The top five things GM needs to do to be successful:
1. Build more reliable cars.
WHY IT’S IMPORTANT: GM has the image of building shoddy cars, mainly because that’s what it did in the 1970s, ’80s and even ’90s. GM neglected its cars in favor of higher-profit trucks and SUVs until five years ago, and the stigma remains.
GM IS SUCCEEDING IF: Vehicles introduced in the next 18 months have above-average reliability, said David Champion, director of automotive testing for Consumer Reports magazine. The forthcoming Chevrolet Cruze compact, for example, must not only be stylish but also perform over time.
2. Raise gas mileage and bring out electric cars.
WHY IT’S IMPORTANT: Experts agree that gas prices will stay volatile. Supply is limited, and when the world economy recovers, demand will rise. That means a possible return to $4-a-gallon gasoline.
GM IS SUCCEEDING IF: Every new model (GM plans to roll out 10 in the U.S. and 17 in other countries in the next 17 months) has markedly better fuel economy in government testing than its predecessor.
3. Cut GM’s bureaucracy so it can make quick decisions in response to market shifts.
WHY IT’S IMPORTANT: Even top GM executives, such as chief executive Fritz Henderson, concede that for years the company’s multiple committees and stodgy divisions slowed decisions and watered down car and truck designs. Now, with swinging gas prices, economic uncertainty and demographic changes, automakers have to change models quickly.
GM IS SUCCEEDING IF: Its new models have cutting-edge designs that sell well, and its quality rankings and fuel economy rise.
4. Do a better job anticipating changes in consumer tastes.
WHY IT’S IMPORTANT: If an automaker has vehicles on its dealer lots that no one wants, it is forced to lower prices to sell them. The trick is to have a wide portfolio of models and flexible factories that can quickly change to different models.
GM IS SUCCEEDING IF: It can adjust when the market shifts because of gas prices or social trends.
