Those following General Motors closely already know that the automaker currently is less profitable as some of its closest competitors, especially Toyota and Volkswagen AG. But The General is currently laying the framework to boost its profit margins — all the way up to the 10 percent mark, according to GM North America Chief Financial Officer Chuck Stevens; by comparison, General Motors averaged a 7.4 percent profit margin from 2010 to 2012.
The objective will be realized by following two comprehensive business practices, including continuing to expand globally while releasing new models that are (also) global in nature, and therefore more profitable. In fact, GM plans to save a billion dollars a year by building more cars on shared global platforms using common components. Currently, 60 percent of GM’s cars are built upon global platforms, and the goal is to increase this number to 95 percent by 2018.
To keep its vehicles more competitive in the marketplace, GM plans to release cars at twice the pace that it does so today, and expects to be able to do so in the next four years. And by 2016, 90 percent of sales are expected to come from newly-released models. And when it comes to labor costs, The General wishes to double the amount of entry-level hourly workforce in the U.S. to roughly 10,000 people over the next 2-3 years; the new entry-level hourly wage is significantly lower than that of years past thanks to a restructured agreement with the UAW.
The GM Authority Take
All that should help GM sell more cars, and make more on each unit sold… and that should boost the confidence of pretty much every stakeholder — including customers, investors, suppliers, along with anyone and everyone in between… and ultimately, that should result in tangibly better products, and an increase in GM’s stock price.