Product Leading GM Renaissance

TRAVERSE CITY, MI – Suppliers latched onto the optimistic product presentation at the Management Briefing Seminars by General Motors Corp. like a remora to a shark.

"It was a terrific presentation," says Rich Rurak, an executive at PPG Industries. "It was great to hear something so positive."

"It was right on the spot," says Jacqui Dedo, president of The Timken Co.'s automotive division. "He gave a good impression to suppliers, which is what I think he was reaching out to do."

John Smith, GM group vice president-global product planning, promised a complete renewal of the fullsize pickups and SUVs in the next 30 months and eight new cross/utility vehicles in the next four years.

GM's John Smith

In the next two years, he says, North America would get 20 new or renewed cars and trucks, affecting more than half its sales volume.

Smith referred to the positive press after a sneak preview of new products to automotive journalists in June, and he showed a roof-view photo of the Saturn Outlook CUV, the third new Saturn to join the brand next year, after the Sky roadster and Aura midsize sedan.

He says GM might have missed the start of the CUV movement, but while it had no CUVs six years ago, today it has six entries selling 430,000 units, or 15% of the segment.

When it has 14 crossovers in 2009, he says, GM expects CUV volume to be 800,000 units a year, 20% of GM's North American sales.

Smith briefly acknowledges the well-publicized troubles GM faces, but he concentrates on the company's response to the main criticism that GM products have not enticed buyers.

To cut costs, GM is banking on more truly global platforms. The Epsilon architecture, which was supposed to be global under vehicles such as the Opel Vectra and Pontiac G6, turned out to have been adjusted so much for each product that it lost most of its common nature, says Smith.

"A little bit different is completely different," he says. GM will have more discipline for the successor platform for cars such as the Vectra and Saab 9-3, he says. The Epsilon II platform will provide midsize cars to eight brands around the world.

A second global platform will come out of Southeast Asia and provide new small cars to Mexico, Canada and, perhaps, the U.S., as well as Asia and Europe.

In the next six years, he says, GM will cut the number of its physical architectures in half, reducing manufacturing costs.

Of course, the product programs of which he spoke were decided in some cases several years ago, before the public suddenly was talking about the possibility of the world's biggest auto maker going into bankruptcy.

But Smith says even in the current environment, the product-development budget has been increased by $1 billion from a year ago.

And with current product, GM is holding on, he says. While North American market share is flat, retail sales are up 0.3 points in the last 12 months, and sales are growing in Latin America and Asia/Pacific.

The big reason GM now is able to produce interesting cars, says Smith, goes back to the 1992 remaking of GM, when another John Smith and Rick Wagoner took over company management.

The company since has knocked down walls between purchasing, engineering and manufacturing, as well as between regions. With new digital design and development methods and one global strategy, the design department has new leverage in using parts and platforms from GM's global network.

In the mid-1990s, GM spent more on trucks, where it lagged competitors and where the market was moving, consequently "our car line got a little long in the tooth," Smith says. Now, cars are getting the attention.

"The company is thinking, planning and executing now as a global entity," Smith says. "We are now able to fully plumb the depths of the unmatched competitive advantage that is our size."