GM Chairman and CEO Dan Akerson addresses shareholders at the maker's annual meeting.
General Motors is stepping up its global product offensive in a bid to raise its margins – and stock price — GM chairman and chief executive officer Dan Akerson told shareholders at the company’s annual shareholders meeting.
“2011 was a good year. But it wasn’t a great year,” Akerson acknowledged.
The maker, the executive pointed out, recorded an all-time record $7.6 billion in profits for 2011, with its EBIT – or Earnings Before Interest and Taxes – coming in at $8.3 billion. Nonetheless, the executive conceded the maker could have done even better.
“We have much more work to do because making GM great again is what we are working toward,” Akerson told shareholders. “Just look at this year’s Fortune 500 list if you need proof. GM was ranked #5 in revenue. But when it comes to profits GM ranked 20th.”
Addressing shareholders, the former Navy officer said his focus will be on closing the earnings gap, “by steadily improving our margins. Akerson called it “fundamental to earning a blue-chip multiple for GM stock and ensuring that the company will be successful for generations – not just a few quarters or a few years.”
GM’s stock price was clearly on everyone’s mind going into the 2012 shareholder’s meeting, just the second since the maker’s November 2010 IPO – which followed its emergence from a 2009 bankruptcy. The maker initially priced its stock at $33 a share, but the figure has fallen sharply in recent months – along with most of the rest of the automotive sector – opening Tuesday trading just below $22.
Some analysts, however, are advising investors that GM could move higher if it can show positive trends, especially in Europe where its Opel subsidiary continues to struggle, and with an overall improvement in margins.
For his part, Akerson insisted during his comments that there is reason to be upbeat.
“Our sales were up in every region. We grew our global market share. We made strategic investments in all of our brands. We strengthened our management team, and in the United States alone, we announced new investments in our plants that bring the three-year total to more $7 billion. That money is spread across 30 facilities, and the investments have created or retained 17,800 jobs,” Akerson said.
Akerson said GM is committed to a broad product offensive. The impact of GM’s updated line-up will be especially profound in the United States, where about 70% of its nameplates will be new or freshened over the course of 2012 and 2013, he stressed, noting that many of the new products are targeting segments where GM currently doesn’t compete, such as the subcompact Buick Verano, the brand’s third all-new sedan launched in three years.
Early sales have been very strong, said Akerson, noting that one of the announcements accompanying the annual stockholders meeting was the addition of a Verano Turbo model.
It will be followed by this summer’s launch of the new Chevrolet Spark minicar, the smallest offering GM has introduced to the U.S. market. Then there’s the new Cadillac ATS at the other end of the spectrum.
“The mission brief for the ATS, by contrast, is to establish a strong Cadillac presence in the largest luxury market segment. The German brands may not see us as a threat but I think the ATS will get their attention. It has rear-wheel drive, it’s one of the lightest vehicles in the segment, our 270-horsepower turbo engine has 40 more horsepower than a comparable BMW and the car will get better than 30 mpg on the highway,” Akerson told shareholders said.
Significantly, the CEO stressed that GM’s product offensive is not limited to the U.S. market. That’s no surprise considering roughly two-thirds of its sales now come from abroad.
In Brazil, the executive noted, GM is following the successful launches of the Chevrolet S10 pickup, the Cruze and the Cobalt with the all-new Chevrolet Spin MPV, which will be unveiled in about two weeks.
While some analysts question the long-term prospects for Opel, Akerson said GM will underscore its commitment to the troubled brand by investing billions in new models like the Mokka, which is the first contender from a German manufacturer in the growing sub-compact SUV segment.
“We’re making this investment even as we address overcapacity and high fixed costs in the region,” he promised.
The biggest growth market targeted by GM is China, where the maker hopes to more than double last year’s record sales by reaching the 5 million annual mark by mid-decade. To get there in what is already GM’s largest market, Akerson pointed to several key steps.
” GM is increasing production capacity by 25% over the course of 2012 and 2013,” he noted, “and we will introduce more than 60 new and upgraded vehicles over the next five years.”