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The big news Monday is GM’s plan for “structural cost reductions” (job cuts and plant closures), but GM wants you to
know that there’s more going on in its recovery plan. GM says the turnaround plan has four key elements:
- Structural cost reductions – the end result of the job cuts and plant closures will be a reduction in capacity
to 4.2 million units per year, 30 percent less than 2002 levels - Health-care cost reductions – this is the agreement cut with the UAW in October.
- Product Renaissance – GM plans to average 15 new models a year “for the foreseeable future.” The plan includes
heavy emphasis on high-growth segments, which GM identifies as crossovers, compact and luxury SUVs, large pickups
and entry luxury cars. Also expect hybrid cars, trucks and SUVs. - Sales and Marketing – Apparently this will include a shift in emphasis from “the deal” to vehicle value and
benefits, and a gradual trend to make the MSRP “more closely match actual transaction prices.”
Market reaction to GM’s announcements is lukewarm, at best. Share prices were up slightly mid-day, but market
analysts seemed unimpressed, with a
UBS analyst describing
the plan as “…essentially as expected, meaning not terribly aggressive.” He predicts the company’s market share,
and stock price, will continue to fall.
[Sources: GM, CNN]