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GM emerges from bankruptcy with a bold agenda

CEO Fritz Henderson says the new, smaller General Motors will focus on customers, cars and changing the company's culture; it will even sell vehicles on EBay. He expects profitability by 2011.

July 11, 2009|Jim Puzzanghera and W.J. Hennigan and Martin Zimmerman

WASHINGTON AND LOS ANGELES — GM emerged from its warp-speed bankruptcy Friday delivering the following message: This won't be your father's General Motors.

Smaller, less debt-ridden and mindful of the $50-billion bet that taxpayers have made on the automaker's survival, company executives pledged a new era of innovation and a steely focus on customers.

Chief Executive Fritz Henderson announced a streamlined top-level management structure and promised that senior executives would respond to customer suggestions on a new website. He also unveiled plans to experiment with selling cars on EBay in California starting next month.

"Business as usual is over at GM," Henderson said at a news conference at the company's Detroit headquarters. "We know we have to change."

The challenges are enormous. The U.S. auto industry is mired in a devastating slump. GM must reverse decades of declining sales and a tarnished image further stained by a government bailout and a trip through Bankruptcy Court.

Still, the company has recently given even skeptics some cause for optimism.

The automaker has a few highly praised models already in showrooms, including the Buick Lacrosse and Chevy Camaro. Its gas-electric hybrid Chevy Volt, set to launch next year, is generating buzz.

What's more, the quick turnaround of the bankruptcy case -- a remarkable 39 days from its June 1 filing to Friday's closing of the sale of GM's best assets into a new company -- means company executives can get started sooner than they expected in putting the past behind them.

The smooth exit offers GM a unique marketing platform to demonstrate that it really is changing, said Brad Coulter, a corporate-turnaround consultant at restructuring firm O'Keefe & Associates in Bloomfield Hills, Mich.

"They've done a fairly radical restructuring in a short period of time," Coulter said, noting the large reductions in employees, dealers and brands. "I think they're positioned for success. . . . It depends on how long it takes the economy to recover and whether the advertising push can rebuild their image and stem the loss of market share."

A key will be winning new customers and keeping the ones it has.

On Friday, Tammy and Frank Ward were shopping at Community Chevrolet in Burbank, looking for a replacement for their 2002 Chevy Tahoe.

"I was planning to buy a Chevy anyway, but it does reassure my thoughts," said Tammy Ward, 43. "They have been around for 100 years. . . . Hopefully they'll be stronger because of it."

Jason Warren, sales manager at the dealership, said the redesigned Camaro muscle car has been selling well: 11 have come to the lot in the last three weeks and each has been driven out by a new owner within 24 hours.

GM's quick emergence from bankruptcy sends a signal to customers that the company is serious about being around for the long term, Warren said.

CEO Henderson said the new company would be focused on customers, cars and changing GM's culture.

"At the new GM, we need to make the customer the center of everything," he said.

As part of that goal, Henderson plans to launch a website called Tell Fritz for people to share their suggestions with him and other senior executives. The company is also preparing an experimental program in conjunction with several dealers in California to allow people to buy GM cars on EBay starting next month.

"Consumers will actually be able to bid on vehicles like an auction," Henderson said, adding that there will also be a "buy it now" feature similar to many EBay auction items. He said the program would be done in a test market; the company provided no other details.

The experiment isn't exactly revolutionary. Dozens of California car dealers -- including those selling GM brands -- sell vehicles on EBay, which claims to be the No. 1 automotive website, with 30,000 participating dealers nationwide. More than 3 million vehicles have been sold through EBay Motors since 2000.

Plans have not been completed with GM, said Rob Chesney, vice president of EBay Motors. Under California law, automakers can't sell cars directly to the public. Vehicles sold through EBay would have to be sold through a dealership.

Analysts said GM may want to focus on selling through EBay because it would be more convenient for car shoppers than visiting several individual dealer sites.

"EBay is a centralized marketplace and a centralized marketplace has more liquidity and variety," said Roger L. Kay, president of research firm Endpoint Technologies Associates.

Henderson announced several moves to streamline the company's management, including a 35% reduction in the number of U.S. executives and a 50% cut in the company's top-level decision-making team.

He also said that Bob Lutz, 77, the vice chairman for product development who has been a driving force behind development of the Chevy Volt, would stay with the company instead of retire. In a new role, Lutz will be "responsible for all creative elements of products and customer relationships," GM said.

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