General Motors will continue investing $8 billion in annual product development, according to the automaker’s President of North America Mark Reuss. The General has invested roughly $8 billion a year to create new products for at least the last two years. For comparison, rival Volkswagen plans to invest 10.6 billion euros this year in new products.
Reuss also said that General Motors’ focus is to maximize profits by not producing more cars and trucks than it can sell.
“For the most part, people are buying our vehicles because they’re great vehicles, not because there’s a gift basket full of cash on the hood,” he said.
The strategy continues to exemplify discipline present at The New GM, marking a major departure in business strategy compared to the old General Motors, which was notorious for overproducing in an effort to maintain high market share, a metric by which The New GM has not performed well . For the most part, this practice necessitated the offering of large incentives, which decreased GM’s profitability (as well as that of its dealers).
One of the pillars of the new company from the get-go following the its exit from bankruptcy was to match production to market demand as closely as possible, even if that calls for idling manufacturing operations at certain plants.