On Tuesday, General Motors CEO Mary Barra suggested her company would exit the other side of the coronavirus pandemic running much leaner than when it went in. While this will probably be the case for other automakers, as many (including General Motors) went into 2020 with restructuring efforts planned or already underway, GM is letting everyone know it’s doing cuts extra right.
This likely has to do with the automaker not wanting to look as though it’s in for a repeat of 2008, now that the global economy’s once again careening toward troubled times — but we’re just guessing. It also seems as though the extreme lack of industrial progress created by months of factory shutdowns has forced executives to fill the void with a lot of hot air. Fortunately, Barra’s message wasn’t totally devoid of useful information.
“We were quickly able to take out significant costs and we are being very conservative about what costs we turn back on,” the CEO told investors during an event hosted by global wealth manager Credit Suisse. “I believe we will come out of this with a lower cost structure that is permanent.”
According to Reuters, Barra said those cost reductions may include changes to a few different vehicle platforms offered by General Motors. Plenty of manufacturers are looking at streamlining production, and Barra suggested GM might also benefit from reducing the complexity of some platforms. While decontenting cars is hardly new, it’s a reliable fallback for the industry when the going gets tough and manufacturers need to reduce overhead.
From Reuters:
She said that the pandemic had given GM the opportunity to go through all of its line item expenses and eliminate redundant processes.
“We’ve found things that we don’t need to do and things we can do more efficiently,” Barra said.
The U.S. automotive industry has been ramping up after the coronavirus shutdown, and major automakers have been keeping a close eye on suppliers in Mexico to see the pandemic disrupts the flow of parts.
Ford CEO Jim Hackett ran a similar idea up the flagpole in December. The Blue Oval similarly mentioned that something needed to be done about risky, long-term loans — an issue GM quietly addressed this week. But Ford then veered into unpleasant tech talk, promising that its credit arm would begin tapping into connected features to funnel your driving data to insurance agencies that may offer discounts if you play nice.
Wow… so generous.
While GM has similar programs, it’s kept them quieter, mainly rolling out its grand plans for investors’ ears. However, making sweet deals with insurance groups is hardly at the top of anybody’s to-do list right now. Automakers are significantly more worried about supply chain issues as the industry restarts, with Barra confirming The General’s situation was no different. She said the company is primarily focused on addressing popular models like pickups and SUVs (which have higher profit margins) and claims they’ll be the vehicles GM will divert parts to if shortages occur.
[Image: General Motors]
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GM CEO Says Pandemic Helped Cut Costs; Decontenting Incoming - The Truth About Cars
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