GM Chief’s Focus Turns to N. America
General Motors Corp. said Monday that Chief Executive Rick Wagoner would take day-to-day control of North American automotive operations from two deputies, putting his job on the line to turn around the money-losing business.
The shake-up at the world’s largest automaker follows GM’s warning last month that it expected its biggest quarterly loss since 1992. Such troubles have sent its bond rating down to just one step above “junk” status at two ratings firms, and its stock price to the lowest level in more than 13 years as foreign competition has eroded its once-dominant U.S. market share to about 25%.
“Rick is saying, ‘I’m putting my neck in the noose on North America, and that’s going to be my primary task,’ ” said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
Reaction to the news was muted, with GM shares edging down 33 cents to $29.05 on the New York Stock Exchange.
Wagoner will take the helm from Bob Lutz, chairman of GM North America, and Gary Cowger, president of GM North America.
GM named Lutz and Cowger to their North American posts in November 2001, when GM commanded more than 28% of the U.S. market.
Lutz, the 73-year-old former Chrysler executive who Wagoner recruited to revitalize GM’s car and truck lineup, will lead GM’s global product development activities.
Cowger will focus on global manufacturing and labor, including efforts to wring concessions from GM’s biggest union, the United Auto Workers, particularly to combat soaring healthcare costs.
“Given the challenges we face in North America, it makes sense for me to assume control of [General Motors North America’s] day-to-day operations and shorten the lines of communication and decision making,” Wagoner said in a statement.
GM’s U.S. sales have fallen 5.1% through the first three months of this year from a year earlier, and its market share has tumbled to 25.6% from 32% 10 years ago and about 27.3% for all of 2004, despite generous sales incentives.
Wagoner had been head of GM North America before being named chairman and CEO.
The move puzzled Efraim Levy, an automotive equity analyst at Standard & Poor’s, who said it cut only one layer of management.
“It removes the opportunity to blame somebody else,” Levy said. But it will be a few years before analysts can judge Wagoner’s effectiveness, given the long time lag in the automotive industry between the launch of new vehicles.
Wagoner said Lutz had requested the change to devote his time to integrating GM’s car and truck development around the world.
Some industry analysts have criticized some of GM’s new cars and trucks launched under Lutz’s tenure, including the Buick Lacrosse and the Pontiac G6 sedan.
But those vehicles were already under development before Lutz arrived at GM in 2001, and the true test of his leadership will begin with the new Solstice roadster due out this year, Cole said.
