General Motors’ Mark Reuss: Hyundai JV Prospects Are Excellent, Culture at GM Ready To Rock
GM President Mark Reuss has high hopes and expectations for successful joint ventures to emerge from a memo of understanding with the Hyundai Group. He says GM’s culture has changed markedly to support joint ventures and points to vehicles like Buick Envista, an entry-level model that is profitable, to make his point.
General Motors recently entered into a Memo of Understanding with Hyundai Group for co-development of a wide array of possible projects, technology sharing and purchasing for shared projects. GM President Mark Reuss says he has high expectations for the agreement despite the automaker’s spotty history with joint ventures.
“This is really a shared vision around what both of our goals are and objectives, and open communication and I think staying agile and flexible because this industry and market isn’t stagnant,” says Reuss.
Skepticism in the industry over GM’s JVs is based on its past deals. GM had a JV and equity investment in Subaru to develop all-wheel-drive crossovers together. The only vehicle to come out of it was the Saab 9-2x Aero, a virtual twin of Subaru’s WRX hatchback, but with Saab interior appointments and some exterior branding. Former GM vice chairman Bob Lutz complained at the time that the two companies’ cultures for product development could not be reconciled.
GM had an equity investment in Fiat during CEO Rick Wagoner Jr.’s tenure as CEO that was a stressful bust.
The JV with Fiat, established in 2000, was unsuccessful due to multiple strategic and operational problems. GM executives said the partnership was meant to streamline costs and gain access to Fiat's advanced diesel technology. However, Fiat’s poor financial state and GM's hesitance to acquire Fiat’s struggling auto division strained relations. GM also was concerned about absorbing Fiat’s debt, leading to the dissolution of the alliance in 2005.
Hyundai Group, of course, does not have the issues that Fiat had a quarter-century ago, and the deal does not involve an equity investment. And Reuss stresses that the two companies have “complementary technology.”
But the cultural differences between the companies are significant. And in any JV, middle-level managers and engineers can thwart success in the name of protecting job security.
What’s the secret sauce to make these deals successful? Reuss points to GM’s ongoing successful JVs as a contrast to former ones struck in the ’90s and ’00s. “We have great successes with LG Energy Systems and Samsung on batteries. We have an ongoing JV with Honda where we shared the Lyriq platform with them, and a separate JV with them for fuel cells.”
Reuss also cautions critics of GM’s culture to make sure they are up to date.
“Ten years ago, we could not have produced Chevy Trax or Buick Envista and we make money at those. You don’t do that with the culture we had 10 or 15 years ago.”
“Anybody that gives a retrospective view of the culture of General Motors, I can tell you it's wrong.”
Without mentioning his name, Reuss could be referring to a scathing description of GM’s culture offered by Lutz on a recent Autoline After Hours episode.
Lutz railed on GM’s culture of constant meetings, heavy staff and bloated research budgets “that served no real purpose.” The former GM, Ford, BMW and Chrysler executive and CEO of now-bankrupt battery-maker Exide Corp. had heavy praise for Tesla Motors founder Elon Musk’s processes at both Tesla and SpaceX.
Communication is “very good” between GM and Hyundai, says Reuss. But he acknowledges that if the people in both companies retreat into cultural fiefdoms, “then you're absolutely right. It won’t work.”
GM’s battery-electric vehicle portfolio is only now expanding into higher volume segments that Reuss has high hopes for. “(GM’s BEVs) are just beginning to hit the market at price points that people can actually afford with ranges that people actually want, and we are kicking up the fast-charging deal.”
Indeed, progress is taking place on BEVs. According to sales data, GM sold almost 21,000 BEVs in July and August combined in the U.S. That means GM is on track to pass Ford and become America’s third-largest BEV maker behind Tesla and the Hyundai-Kia.
GM is also fast-tracking more hybrids and plug-in hybrids to meet demand and changing government mandates around zero-emission powertrains. And both GM and Hyundai are keenly interested in building out hydrogen fuel cells for both trucking and stationary energy.
It could be a great match.
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