General Motors CEO Mary Barra, along with GM’s other executive leaders, gathered at GM’s Milford Proving Ground yesterday to present the company’s future goals to financial analysts and investors. Barra outlined a strategic plan that incorporates several different major initiatives that should help GM achieve 9 to 10 percent gains in earnings on an EBIT basis.
“Our strategic plan is a pathway to earn customers for life and create significant shareholder value in the process. Every chance to connect with customers is an opportunity to build a stronger relationship,” Barra said of the initiative.
1. To Lead In Product And Technology
The first part of the growth plan is to “lead in product and technology.” The execution of this has already begun for 2015 model year vehicles, with GM rolling out the world’s largest automotive deployment of 4G LTE with Wi-Fi in its 2015 model-year vehicles. The automaker also announced previously it would introduce vehicle-to-vehicle connectivity in the Cadillac CTS for 2017 and launch its ‘Super Cruise’ automated driving technology in the CT6 full-size flagship sedan.
In addition, GM will use a ‘Mixed Material Body Structure’ to build its cars, which is a GM-patented welding technology that uses a combination of steel and aluminum parts to save weight, reduce the number of parts needed to put the car together and offer class-leading stiffness.
2. Establish Cadillac As Separate Business Unit
Second, GM will establish its Cadillac flagship brand as a separate business unit, moving the company’s offices from Detroit to Manhattan in order to “pursue growth opportunities in the luxury market with more focus and clarity”. An important part of Cadillac growth will also be to introduce new models, such as the upcoming 2016 CT6 full-size flagship for North America. Cadillac will also introduce nine new models in China in the next five years.
3. Continue Dominating In China
China, the world’s largest car market, is at the forefront of GM’s focus. In addition to expanding Cadillac in the region, the automaker will invest $14 billion through to 2018 in order to open five new manufacturing plants and support its sales network in the region, which sells just under 5 million vehicles annually. It will also launch 60 new or refreshed vehicles in the region in the same time frame.
4. Grow GM Financial
The continued growth of GM Financial is also a major part of GM’s growth plan. GM Financial’s earning assets have grown from $8.7 billion in 2010 to $37 billion today as it continues to invest in the sales of new GM vehicles all over the world. The company will enter the Chinese market later this year.
5. Improve Core Operating Efficiencies
Last, Barra outlined GM’s plan to improve its core operating efficiencies. This entails improving GM’s historically-patchy relationships with suppliers, deriving more volume from fewer vehicle architectures and lowering materials and logistics costs. GM says that this will help deliver significantly higher profit margins on upcoming high-volume launches, such as the all-new Chevrolet Cruze and Opel/Vauxhall Corsa.