GM Tunes North American Unit to Keep Auto Maker Humming in 2013

This is the first in a series of executive interviews on the state of the North American industry. 

General Motors saw its North American operations gain momentum in 2012, as capacity reductions of recent years and new production discipline drove strong pricing for its cars and trucks to keep the region on track for a second straight year of annual profitability approaching $7 billion.

GMNA could find itself in an even stronger position in 2013, when it rolls over 70% of its product portfolio to all-new or redesigned cars and trucks. Chevrolet alone will introduce 13 new models.

The new vehicles, occupying both tried-and-true and emerging segments, will feature enhanced performance, fuel savings, creature comforts and connectivity technologies on par with, or exceeding, key competitors for the first time in a decade.

Expect another solid pricing story as next year unfolds, with new products likely dropping incentives to historical lows for the auto maker. Greater consumer demand should drive 3-shift output schedules at most of the company’s North American assembly plants and expectations are high for U.S. market-share gains up from 17.6% at the close of the third quarter.

However, 2013 will not come without challenges. Capacity reductions stemming from GM’s 2009 U.S. bankruptcy could present inventory shortages. And the revamped dealer body likely will be called upon to sell vehicles with high-tech gadgets and propulsion systems new to consumers.

GMNA must put the right marketing message in the correct channels to attract new buyers to showrooms as well as attract the best engineers and designers to its labs and studios.

Mark Reuss, 49, who has served as president of GM North America since 2009, is a mechanical engineer by training. He carries international experience from a stint in the Asia/Pacific region, including Australia, as well as testing certification for the fabled Nurburgring race track in Germany, giving him a one-two punch of operational chops and product expertise.

Reuss offers a snapshot of GMNA’s road ahead in this email interview. The following is an edited version:

WardsAuto: Does GM have sufficient capacity in place to meet expected market growth in 2013, and what sort of flexibility is at its disposal to accommodate potential upside in demand both next year and in 2014?

Reuss: It’s all about keeping pace with changing marketplace conditions and aligning manufacturing capacity to consumer demand. We feel that we're fairly well placed in terms of capacity. Ideally, we'd like to be running all of our plants on three shifts, which is the most efficient way to operate.

Although the economy shows signs of improving, it’s still not exactly in what one would call a boom cycle, yet. So, we have a few plants running on two shifts that we'd like to eventually have running on three.

WardsAuto: How proficient is your dealer network at selling electrified and other high-tech, fuel-efficient vehicles to the American consumer, and what steps have you taken to make sure retailers have the proper know-how?

Reuss: I would say they’re very good, and they are only going to get better. We’ve gone to great lengths to work with our dealers, to share information with them, to help train their staffs and to learn from them about how best to proceed.

When you talk about educating the customer, dealers are on the front lines, and we want them to be the best. We want to lead the industry in terms of having the best possible customer experience, and this is part of that, and will be an even bigger part in the years to come.

WardsAuto: How critical is it for GM to hire from the outside to keep pace with rapid industry changes, such as infotainment technology and non-traditional marketing?

Reuss: I think we have a terrific balance of outsiders with specialized knowledge of other areas that affect us, including infotainment technology, and the fresh perspective they bring to our business, and the veterans that have been in this industry and at this company for a long time and have developed a keen understanding of how our business operates.

It’s very important to have both, and I have to say I like our mix.

WardsAuto: GM has a big 2013 ahead in terms of new products, turning over some 70% of its portfolio to all-new or redesigned vehicles by the end of the year. Is that the pace of new product we can expect going forward?

Reuss: I’m not going to get into our future product programs, either in terms of number or content, but I can tell you that 2013 is just the beginning. It’s very important that our lower breakeven point has allowed us to be able to invest capital in a straight line, rather than a curve that undulates with those peaks and valleys you mention. We’ll be more constant and consistent in our product development investment than we’ve ever been.

WardsAuto: What makes you most optimistic about 2013?

Reuss: Just the steady improvement we’ve seen in the past 10-12 quarters, the measured climb back up, for both our company and the industry. When things go in the tank, the auto industry is typically among the first to flounder, and when things turn around, it takes us that much longer to get back.

When you look at how bad things were three, four, five years ago, and you see how far we’ve come since then, you can’t help but think things are going to continue to get better.

Housing is picking up, consumer spending is up because consumer confidence is up, and I think there is still some pent-up demand for new cars and trucks out there. Industry-wide sales have grown every year since the bottom fell out, and I don’t see any reason to believe they won’t do the same in 2013.

Overall, I am most excited about how we are taking a disciplined approach in running (GMNA) for the long term. Short-term sales always matter, but not at the expense of a long-term foundation of excellence and putting our dealers and customers first. That's a very different approach from the past 20-plus years, and we’re proud of that.

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