GM sticks to strategy despite falling sales and shares
Despite tumbling United States sales and a falling stock price, General Motors CEO Mary Barra says she will stay the course with a strategy of cutting low-profit sales to rental car companies and keeping resale prices strong.
Speaking to reporters before the company's annual shareholders meeting on Tuesday, Barra said GM's share of profitable retail sales to individual buyers is rising and trade-in values for cars and trucks remain strong.
GM's sales fell 18 per cent last month compared with a year ago. Its 15.7 per cent market share was the lowest since at least 1980, according to Ward's Automotive. The company's stock price is down more than 10 per cent for the year and is nearly US$3 below its initial public offering price from 2010.
But the company's first-quarter profit doubled, to $1.95 billion, and it posted record earnings last year of US$9.7 billion. It also reduced sales to rental car companies by almost 50 per cent last month.
Here's how Barra answered questions from reporters, edited for length and clarity:
Q: You've stuck to your pricing discipline and cut sales to rental car companies. That has caused your sales to fall. With US auto sales nearing a plateau, will you change your strategy?
A: "We'll be sticking with it. I think we've had the most significant, not only last year but this year, increase in retail share growth. We're going to continue to do that, looking for the quality of the sale. We think it's very core not only to strengthen the business, strengthen residuals (trade-in values), it has benefits. That also will position us well when and if the cycle turns."
Q: With the stock price falling, are you considering increasing your stock buy-back programme to try to stimulate that?
A: "We have a very clear capital allocation strategy. First, we're going to make investments in the business, we're going to maintain an investment-grade balance sheet. What remains will be returned to shareholders. We will also work to continue to deliver superior results. We're growing (profit) margins. We're going to continue to do what we say we're going to do, and we believe that, over time, that will be reflected in the share price.
Q: You're moving forward quickly with autonomous cars. So are the regulators with guidelines for the industry. Some companies would like to see fully autonomous cars approved when these regulations come out, no steering wheels, no pedals. Where does GM stand on that?
A: "We think that having that capability, when the steering wheel and pedals are still in the vehicle, is a very good way to demonstrate and prove the safety. We understand safety. We've been doing this for decades. We want to lead in autonomous, but we want to do it safely. We believe putting in the technology in vehicles that still have steering wheels and pedals, initially, is an appropriate strategy."