General Motors: English Version: Interview Rick Wagoner

Der Chef von General Motors muss den schwer angeschlagenen Autokonzern vor dem Untergang retten - und ist froh, dass er dabei auf die deutsche Tochter Opel bauen kann

Mr. Wagoner, General Motors just turned 100 years old. Most recently the company posted a $15.5 billion quarterly loss, averaging some $2,000 per car, partly due to write-offs. Do you even feel like celebrating?

Well, 100 years comes only once. So if you're alive you celebrate, right? That's what we're doing. We certainly have been booking some big losses this year and last year - a huge amount of that related to restructuring the business and putting uncompetitive aspects behind us. We're at a turning point.

What uncompetitive aspects are you referring to?

Over the last 15 years we spent about $103 billion funding pensions and post-retiree health care here in the U.S. - a legacy of labor agreements that have been in place for 50 or more years. Now we've reached an agreement with our unions on funding a health care trust, which will benefit all sides. Starting in 2010, our spending in post-retiree health care and pensions will be more like $1 billion rather than $7 billion a year. We've also taken enormous efforts over the past three or four years to radically improve productivity.

That resulted in massive layoffs, among other things. Aren't GM's problems to a large degree a result of bad management decisions? Did you correctly identify your customers' needs, for example concerning fuel-efficient vehicles?

Well, you never bat a thousand there. But as of today, 11 out of the last 13 models we've launched in the U.S. have been cars or cross-overs rather than fullsize SUVs, and 18 out of our next 19 models are cars or cross-overs, too. We obviously didn't make that decision six months ago when oil prices spiked. I think it's been fairly clear to most of us in the industry that energy costs were going to be increasing because the global demand for energy is going up. What was not so clear was that oil prices would double in the span of less than a year. Even today, oil prices are still over 60 percent higher than they were a year ago. I'm not sure that oil is going to stay at today's level. But all of our plans are built around the assumption that oil prices will remain high.

Fieser Crash beim Driften

Along with Chrysler and Ford, you're currently asking Washington for billions of dollars in help. How close is GM to the brink?

Not close at all. We've got a huge amount of cash, we've got undrawn credit facilities, we've announced plans to sell some assets. And the financial markets eventually will open up, we believe. Just to be clear: When the energy bill - which includes stricter fuel standards - was approved last year, $25 billion in direct loans were authorized to help fund new technologies. It was indicated that the overall cost for the industry would be in the range of $150 billion. So the $25 billion was actually a fairly small piece of it. What we're asking for right now is: Could the government please appropriate those funds and set up the rules and the ability to draw against those funds? Because that hasn't been done yet.

Knowing all that, some Wall Street experts are still betting 80:20 against GM's survival.

Sure, those are the same guys who said there's no way we'd work with the unions to approve a health care agreement, which five years ago was viewed as the kind of thing that would one day bankrupt General Motors. I'm not saying there aren't challenges. But I think we do have to recognize that we're in an extraordinary situation. When is the last time oil prices doubled, the market has plummeted, housing prices have so dramatically come down?

Have you been too optimistic about how the market would develop?

I don't think that's been a big factor. The U.S. market ran 17 million units, kind of flat, for four or five years in a row. Last year it was a little off, 16.5 million, even though the economy was not strong. In that context, I think it was not imprudent to expect that the industry would continue in that range.

Right now it looks like only 12.5 million vehicles might be sold in the U.S. this year, rather than 16.5. So things might get worse.

We used what was a conservative estimate, 14 million units for the next couple of years, oil prices at $130 and then trending up to $150 next year. That's the basis of our assumptions.

In July the industry was at merely 12.7 million units on an annualized basis.

July was 12.7 million, August was 13.1 million, yes. But we don't think the industry will continue that low. It's fair to say that consumer sentiment now is the lowest it's been since they've been doing the surveys.

So you're optimistic that the worst is over?

No, I would not go that far. What I can tell you is: I think we're bouncing along the bottom right now. What I cannot tell you is when we will begin to turn up.

One of GM's main problems is the drop in sales of SUVs and trucks, which could have been predicted. Did you bet on the wrong horse for too long?

Let's be honest: We've executed SUVs and pick-up trucks very well and have a market share of about 40 percent. That allowed us to fund things like research and development, pensions and health care. I don't think it's fair to second-guess a strategy of doing great products in what were the hottest and most profitable segments. That, to me, is classic Monday morning quarterbacking. Certainly we would have liked to also have spent more money on other vehicle categories. For the last several years, we've been moving aggressively in that direction. About five years ago, we put the product development under a global scheme led by our regional engineering centers - including, of course, the one in Rüsselsheim. When we see the roll-out of these next-generation midsize cars, that's going to help us a lot as we get into a world in which the U.S. consumer values fuel economy more like the European consumer has for a long time. Do we wish we had done that global product-sharing initiative ten years ago? Sure. But we're taking advantage of the opportunities now, for example by introducing technologies primarily developed for European markets into the U.S.

Even fairly recently we got the impression that GM was ready to dispose of Opel...

I worked in Europe in the 1980s and have had corporate positions since the early '90s. I'm not aware of any time during that period when anyone seriously considered a General Motors without Opel. You hear rumors out there, but I have to tell you nobody seriously considers that. And I think the way we're running the business today, the Opel contributions to the company are greater than they've ever been before - exactly because of Opel's product-development capability in segments of the market that are growing dramatically.

So you are happier than ever to have Opel?

Yes, absolutely. Naturally, there are some things that I would like to see us do better with Opel.

Like what?

We'd like to see a higher market share, we'd like to see higher profitability. Remember back in the late '80s and early '90s when GM Europe was earning huge amounts of money, driven by red-hot Opel products, at that point the Vectra and Calibra? Today the footprint is huge in Europe, and as we look to the opportunity in Russia and other markets in Eastern Europe, the Opel brand is very helpful to our efforts there. If we didn't have an Opel we'd want to create one! That said, I have been somewhat frustrated over the years that we have a huge engineering capability in Germany and we don't always get the market appreciation for German engineering, which is highly valued around the world. Those are the kind of things that I think we can do better.

We had a period starting in the mid-'80s where the quality of Opel cars was very poor.

True. But to be fair, in the late '80s and early '90s that was significantly turned around.

Being a global company, why did you focus for so long on the American market, with brands like Cadillac that are almost not represented in Europe?

I don't think it's fair to say we focused primarily on the American market. We are the biggest player in South America, and have been for many years. In places like China we moved very fast and aggressively. As for the U.S., you can't escape the fact that it's first of all a very big market. Everybody wants to play here, right? It's not bad to be a big guy in a big market. I would never apologize for that. But it is somewhat of a unique market - if you look at the geography, the wide-open spaces, the farm communities that love pick-ups. Energy prices have always been very low, not just in the recent past but for almost 100 years.

How important is the GM Volt, slated to go on sale in late 2010, for the company's future?

It's very important, on two levels: It's emblematic of the direction the company is going in, in an industry which has relied 98 percent on petroleum as the source of energy for 100 years. But it is now time to move in a new direction. That's not going to happen in two years or five years or probably even 15 or 20 - but we need to get moving, and the Volt is the best solution to really move rapidly in that direction.

Is this is the one car that has to save the company?

Well, I think sometimes the media coverage is given to a bit of hyperbole. Can a car which we sell 10,000 or 60,000 or even 100,000 units of "save" a company that sells nine or ten million units globally? In a direct financial sense, no. In the sense of creating an umbrella for how the company is viewed, it can have a huge impact. A good example here in the U.S. is the success that Toyota has had with its Prius hybrid - that has provided a huge umbrella for people who buy even Toyota SUVs. Similarly, the Volt can change our image. It's an appealing concept: Most people go 40 miles - 60 kilometers - a day, and the battery will cover that. If you need to go longer distances there's a small engine to power the battery. I think that's a breakthrough.

You had a headstart with the all-electric EV-1, but then you decided to cancel that program. A mistake?

If we had to play it again we would obviously have found a way to keep the EV-1 going. It was a technological marvel, an unbelievable vehicle. But after we did the first 200, nobody wanted to buy the EV-1. At the same time, gas prices in real terms were going down, down, down! We couldn't build enough SUVs to meet demand. People were roaring into the showrooms to buy these cars. Still, looking at the Volt, among other things, developing the EV-1 is now paying back in a significant way to the company.

How confident are you that by the end of 2010 the first Volts will indeed go on sale?

I think we said from the beginning that there are risks. But we continue to pass all tests. I think the car is going to be a huge hit. For broad-scale usage in a market like the U.S. and a lot of Western Europe the Volt concept is going to be very attractive because consumers who buy the Volt are not going to have to radically change their personal driving habits.

For decades, General Motors used to be the world's biggest car company - until recently when you were overtaken by Toyota. Do you see GM becoming number one again?

Sure! The last time I checked, in the 15 largest markets in the world we lead in 13 of them. I think the two where we don't lead are Australia and Japan. Look, Toyota is a great competitor. But the fact is, in most of the countries of the world we go head-to-head, we've been able to do very well. So there's no reason for me to think that we couldn't be number one again.