Raft of New Products, New Structures Critical to GM's Fortunes in 2000-plus

Like the millions planning either exotic celebrations or hiding in fear, Jan. 1, 2000, is more than a new year for General Motors Corp.

It's a rare opportunity for a fresh beginning - a time the world's largest automaker is approaching with hopes it can continue a quick transformation from an inefficient maker of ho-hum vehicles into a state-of-the-art corporate giant offering spirited products. It's a metamorphosis GM has tried before over the last two decades and failed.

But there is a sense this time that the automaker is sincere, because it is focusing on fundamentals and in is good financial health, even though it seems unlikely that GM will regain some, if any, of the market share it has lost to increasingly strong competition.

It's a smart move for GM to hinge the early stages of its turnaround on a deluge of new models, including the Pontiac Bonneville, Chevrolet Cavalier, Monte Carlo, Impala, Tahoe and Suburban, Cadillac Deville, Buick LeSabre, the Oldsmobile Aurora, Saturn LS and GMC Yukon/Yukon XL.

The product sweep is impressive and highly visible. But new vehicles don't always provide a sales spike. And closing out the light-truck-crazed 1990s, some of GM's product investment decisions need to be questioned; after all, three of its brands - Buick, Pontiac and Saturn - still have nothing that closely resembles a sport/utility vehicle or pickup and won't for at least another year.

Cadillac also has been ignored and can hardly any longer be expected to tackle Lexus, BMW, Mercedes and even Lincoln. Its product portfolio is badly outdated and its share of the market is sliding - even though the luxury market has been growing through the late 1990s. The division has set an interesting comeback course, but it needs to be focused. And Cadillac must accept that it still can be successful and profitable without the huge sales volumes of the past.

Meanwhile, GM is focusing on less-profitable areas. Bonneville and Monte Carlo are in relatively low-volume segments that some automakers, like Ford Motor Co., have vacated entirely. Saturn LS enters a flooded midsize car segment where GM already is well represented. Its small-car program already is unprofitable and Cavalier/Sunfire's minor facelift may not prove enough to withstand competition from Dodge Neon and the all-new Ford Focus.

Even the hallowed ground of the Suburban is not safe with Ford now challenging with its Excursion. Suburban has been wisely overhauled, but GMC's version is undergoing a confusing name change to Yukon XL, in a seemingly ill-considered dumping of one of the few GM brands with positive name equity.

Many observers think GM will never be able to reclaim market share in leaps and bounds because of widespread competition in nearly every product segment. They say its days of domination are over.

But there is hope in the unknown. For years a latecomer into hot segments, GM could stir excitement with the corps of forthcoming vehicles it says it has targeted at the emerging - and potentially huge - "crossover" market. They should begin appearing next year or 2001. "We have a lot of crossover-type vehicles in the pipeline that have tested very, very strongly. In a couple of cases we're going to be first to market," says Michael DiGiovanni, GM's chief of North American market research and forecasting.

To create a segment, innovation and speed are needed. Those are two attributes not often associated with GM. But they are surfacing within The General's ranks. Originality showed with the creation of e-GM in August. The Internet business group will harmonize the company's electronic commerce and push technological initiatives such as Onstar. Besides cutting product development time and costs, if the much predicted cyberspace shopping boom hits the car industry within five years, GM stands to be better positioned than most competitors.

In addition to using technology to shop, GM also wants consumers to find it in the cars or trucks they purchase. So it has set a goal for OnStar subsriptions to rise from 75,000 to 1 million in 2001. GM is considering offering the in-vehicle communications systems to other automakers, which would expand awareness of the company's technological prowess.

There also are plans to expand the use of DirecTV and night vision and offer vehicles with personalized web sites and voice-activated Internet access. Hughes Electronics could provide a valuable sales conquest tool to GM over competitors lacking such resources.

GM has unleashed so many changes on its corporate structure it may take employees years to adapt. And its assembly plant network still is geared too much toward cars and continues to have trouble meeting demand for light trucks. Capacity problems have no rapid remedy.

And while GM's attempts to predict sales patterns, streamline dealer ordering and better utilize sales and marketing staff have languished initially, if its proposed capabilities and benefits materialize, GM would be a bona fide monster.