Shape Up or Ship Out, GM Chairman Warns

The new chairman of the new General Motors Co. has put GM executives and dealers on notice.

Unlike past chairmen and chief executive officers of GM, Edward E. Whitacre, Jr., has handed his executive team and its auto retailing organization a market-share growth goal, but in the form of an ultimatum that starts near the top of the organization.

Unless GM shows progress toward exceeding a 20% U.S. market share over the fourth quarter of this year and ‘definitely’ in 2010, Whitacre told the board and 15 top dealers in meetings, management heads will roll, not necessarily excluding President and CEO Fritz Henderson.

GM's share finished the third quarter at a 19.4% level, meaning that Whitacre isn't allowing GM much recovery time to regain market share from the slump which followed the cars-for-clunkers spurt in August.

For his part, Henderson said he would abide by Whitacre's mandates, even though they could compel development teams to slash their time frames by up to one-third, from about 36 to 24 months.

At a Detroit Metro Airport meeting with GM's 15 top dealers Sept. 9, Whitacre was adamant in whipping the reins for market growth “as soon as possible.”

He displayed '10-model ads featuring himself as a buy-GM advocate, a director tells Ward's, and brushed off a comment by another director who opined that at age 67, Whitacre perhaps was too old to be pitching for new-vehicle purchases from younger customers.

“Ed is very blunt,” saysd GM vice-chairman Robert A. Lutz. “He believes in cajoling underlings, using the veiled threat of ‘my way or the highway’ to induce fear.”

A professor of corporate governance at the University of Delaware, Dr. Charles M. Elson, says Whitacre's tactics run “the risk of undermining the CEO's authority.”

AutoNation chairman and CEO Mike Jackson said that at the end of the top-dealer session, Whitacre asserted that “if we don't get this done, we'll find someone who can.”