Automotive News Europe - February 2, 2009 - 22

PAGE 22 · www.autonewseurope.com February 2 , 2009 Automotive News World Congress GM’s COO: 4 brands are key to future Pontiac will continue in scaled back form, Saturn must change, no place for Saab in US Jamie LaReau Automotive News Europe DETROIT General Motors will go to market in the US with four core brands in the future: Chevrolet, Cadillac, Buick and GMC. Pontiac will be shrunk “significantly,” a senior GM executive told the Automotive News World Congress here last month. Chief Operating Officer Fritz Henderson said that GM is conducting a strategic review of its Saab and Hummer brands and that the “status quo” for the US-only Saturn brand will not work. “We need to do something different with the Saturn brand,” he said. Henderson stopped short of saying GM would outright shutter the brand, but he made it clear that it would not remain in the same capacity and form it is today. Likewise, GM is working with the Swedish government on a plan to help the Saab brand. “We’re engaged with the Swedish government,” Henderson said. “We’ve talked to investors and we’ll see where it goes.” Three-quarters of Saab sales are in Europe, he said. “Saab is not a US strategy.” Henderson said the four core brands comprised 83 percent of GM’s total sales volume in the US last year. Going forward, the Pontiac brand will “shrink substantially,” Henderson said. But the fact that GM is investing heavily in the Buick brand in China will benefit that brand in the US. “When you see the new LaCrosse, it will be very familiar [when compared] to the one you’ve seen GM reveal in China,” Henderson said. Asked if GM should have followed the 2006 advice of Jerry York, Las Vegas billionaire Kirk Kerkorian’s former representative on the GM board, to sell Hummer and Saab, Henderson said, “With the benefit of hindsight, you might say we should have moved then.” a barrel in 2009, he said. During his speech, Henderson outlined the volatile markets that led to GM’s cash crisis late last year. He said that if GM does not get the second installment of the $13.4 billion (about ¤10.3 billion) loan the government granted, it will run out of cash before the end of March. GM received a payment of $5.4 billion on January 21. That payment was originally due earlier, but was delayed by the change in administration. Fixing public image The government gave GM the first installment of $4 billion on December 31. GM is working with its stakeholders to refine the viability plan it submitted to Congress on December 2. In that plan, GM said it would direct most of its marketing and engineering resources toward Chevrolet, Cadillac, Buick and GMC. Henderson said GM’s next challenge isn’t just streamlining operations and developing advanced technology, it’s also fixing its public image. “Our job is not only to build vehicles people want to buy,” Henderson said. “But to communicate that people want to buy our vehicles.” ANE Volatile markets If oil prices remain low, GM would be challenged to successfully sell key future vehicles such as the Chevrolet Volt plug-in hybrid sedan, he said. But GM is planning its future business around oil being $130 to $160 a barrel in the next few years. GM is projecting oil will average about $53 Leuliette: Use crisis to promote industry Partsmaker boss sees opportunity to change auto industry perception David Barkholz Automotive News Europe DETROIT Dealers, suppliers and auto executives must use the crises at the Detroit 3 to communicate the industry’s economic importance to the nation, Tim Leuliette, CEO of partsmaker Dura Automotive Systems, said. At the Automotive News World Congress here last month, Leuliette called for an umbrella association to push for a national manufacturing policy and educate the public on the millions of jobs and community contributions tied to the auto business. Leuliette dubbed his proposed association the American Automotive Industry Association. The group would represent the interests of the car builders, suppliers, dealers, labor and other stakeholders, he said. Internally, the association would promote a “common product creation process” to speed and reduce the cost of bringing new products to market, Leuliette said. The group would be an opensource information portal that would use the Internet to connect the automakers, suppliers, associations, universities, government agencies, unions and others, he said. Leuliette said the Obama administration could be asked to help fund “this collaborative, next-generation management and product development process.” “This is no pipe dream. There is a group working on this strategy right now,” he said. Photo: Joe Wilssens Linamar CEO: Hundreds of suppliers may fail in months Hasenfratz wants more government and union help for supply chain Robert Sherefkin Automotive News Europe DETROIT Hundreds of North American auto partsmakers may fail within months as a weakening economy forces automakers to slash production, the CEO of Canada’s secondlargest supplier said. “We will see fewer OEMs and fewer suppliers either as a result of irreparable financial distress or for some as a result of a strategic shift out of the automotive industry,” Linamar’s Linda Hasenfratz told the Automotive News World Congress here last month. In January, at least three Michiganbased US suppliers sought bankruptcy protection or liquidation. Checker Motors, the partsmaker that once produced the Checker taxi cab, filed for Chapter 11 bankruptcy on January 16. That same day, electronics supplier May & Scofield shut down after Bank of America foreclosed on its US assets, the Associated Press reported. In addition, Specialty Motors Holding filed for Chapter 7 liquidation. “The immediate future is a fairly gloomy place,” said Hasenfratz, who is also chairman of the Original Equipment Suppliers Association (OESA). But once the market turns back up, “with fewer suppliers and rising production, we all have a future to focus on,” she said. Hasenfratz called on government and union support along with more cost cutting among her supplier She applauded contractual changes from the UAW, but called on labor “to come to the table with further concessions to create a competitive cost environment for these companies to operate in.” Photo: Glenn Triest Company COO Fritz Henderson has outlined the future of a streamlined General Motors, based around four core brands: Chevrolet, Cadillac, Buick and GMC. Calling for support Government is the next target in her sights. Hasenfratz, and the association that she chairs, are following automakers in seeking government help. Their first priority is “quick pay,” she said. She would allow automakers to tap the Troubled Asset Relief Program, or TARP, funds if they would agree to pay suppliers more quickly. “This is an easy, simple way to put more cash in suppliers’ hands today,” she said. Another priority, she said, is government guarantees for suppliers’ receivables. This would improve access to supplier financing. The third priority, she said, would aid suppliers by allowing them access to bridge loans or access to credit lines through TARP. Lastly, she said, OESA is advocating that the government provide debtor-in-possession financing in the event a supplier enters Chapter 11 reorganization. Hasenfratz cautioned against protectionist policies creeping into government-backed solutions. “It is common knowledge that protectionist trade policies were a key factor in the escalation of the Great Depression. Let’s not make those same mistakes again,” she said. Linamar, a global supplier of powertrain parts, has 37 plants in Canada, the US, the UK, Mexico, Germany, Sweden, Hungary, China, Korea and ANE Japan. “A good crisis is a terrible thing to waste; let’s not waste this one.” Tim Leuliette, CEO Dura Automotive Systems Leuliette said the American movie industry faced a similar crisis in the 1960s when nudity and violence in films began to erode consumer confidence in the product. Making strides The industry organized and found a forceful spokesman in Jack Valenti to convince Congress and regulators that the industry could police itself, Leuliette said. The result was a voluntary rating system that labeled content G for general audiences, M for mature audiences, R for restricted and, finally, X. The auto industry faces a similar challenge in demonstrating that it has made strides in bringing forward the kinds of high-quality, fuel-efficient and reliable products that the public can support, he said. “A good crisis is a terrible thing to waste,” Leuliette said. “Let’s not ANE waste this one.” Photo: Glenn Triest Linda Hasenfratz says suppliers are mostly ahead of the game in cutting costs in the current downturn. peers to rescue the auto industry. She also said suppliers should follow Linamar’s lead in rapidly and deeply cutting costs, reducing staff and overheads to match new sales levels while focusing on “diversifying our businesses to take our skills to markets that need us.” “Suppliers are really a step ahead of the process, having already taken the haircut that the government is now looking to other parties to sign up to accept,” she said.

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