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Automaker seeks return to former glory with restructured operations and reduced debtload
Today the sun rose on a New General Motors, a move which will also see the sun set on a lot of people’s careers. GM emerged from bankruptcy protection at 6:30 a.m. Eastern Time with news of a serious corporate restructuring plan that will take effect over the next few months.
Due to leadership (and in some cases arm-twisting) by the Obama Administration, the new GM, headed by CEO Fritz Henderson, is poised to return to its once-great status after shedding its debt and healthcare obligations by a massive $48 billion. Much of this comes as the UAW made serious concessions in accepting a new contract with the automaker. GM also hopes to significantly reduce its cash-burn after eliminating a third of it’s dealership network. Additionally, the automaker looks to profit from the sale of the Saturn, Saab and Hummer brands, as well as through selling-off much of its stake in its European operations, including Opel to Canadian autoparts manufacturer Magna International.
“Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers,” CEO Fritz Henderson said in a statement.
Henderson’s plan will see 6,000 (or 20 percent of) white-collar employees lose their jobs by October, with 35 percent of all executives being dismissed. Many executives will be cut from the company’s old Automotive Strategy Board and Automotive Product Board, a complex, multi-tiered system of management which will be axed in favor of a small committee that will meet weekly to make decisions about the future of the company.
Henderson says the move will cut those making the decisions at GM in half as the automaker focuses on its four key brands – Chevrolet, Buick, GMC and Cadillac.
Sales and Marketing will also no longer be under the leadership of one individual, as that part of the company is split. Sales will report directly to Henderson, who was unclear about what that meant for the current Sales & Marketing boss, Mark LaNeve. GM will also bring back veteran Bob Lutz to manage marketing, as well as design, brands and communications.
This will be a particularly vital role as GM looks to introduce a new line of vehicles into the marketplace to help re-brand the company. In total 10 new vehicles will launch in the U.S. in the next 18 months, with 17 overseas.
[Source: Automotive News]
The long list of General Motors dealerships got a lot shorter recently, but it will get shorter still as the company has made known plans to reduce the number of Cadillac dealerships in its network.
“Our current footprint of 1,400 Cadillac dealers, most of which are dualed, is out of sync with modern luxury automotive retail,” said GM’s sales boss Mark LaNeve at a dealership conference last week.
Those 1,400 dealers sold an average of 110 cars last year. Other luxury brands operate on almost the reverse, with Lexus selling 1,158 cars on average from just 226 dealers.
As many of those dealers are paired up with other GM brands it often means that there are Cadillac dealers in regions that might not normally sustain such a business. Despite that, GM’s plans are to focus on cutting dealerships in urban centers where customers have another Caddy retailer in close proximity.
The number of dealers to be cut is reported to be significant and it would have to be for the Cadillac brand to be as streamlined as its German and Japanese competitors.
Based on the numbers, the amount of Cadillac dealership closings could be as many as 700. After the recent announcement that GM would cut 1,124 dealers from other parts of its company, followed by news that 405 Pontiac, Saab, Saturn and Hummer dealerships would close, the total number of GM dealerships left totals 4,300 – that’s 700 more than what GM listed in its viability plan to the U.S. government.
There is no word on how much advance notice the terminated dealerships would get but the deadline for closures would be the same as with the other dealerships – October 31, 2010.
General Motors ends Woods’ lucrative endorsement deal
As of December 31, 2008, General Motors ceased its endorsement deal with Tiger Woods after nine years. The deal, reportedly worth up to $7-million annually, ended due to several factors, including the current hardships in the auto industry. A joint press release also stated that Woods is eager for more personal time after the news that he and his wife are expecting their second child.
The sponsorship agreement that saw the 14-time major winner endorse Buick products in the USA, Canada and China.
“Tiger has been a great friend to GM and a fantastic asset through the years helping to bring consumer awareness to many new GM products,” said Mark LaNeve, General Motors North American Vice President of Sales, Service and Marketing.
In a statement, Woods returned the good will, stating that, “I am very proud of the long standing partnership I’ve had with GM and have enjoyed being a part of the company’s dramatic product evolution. We’ve had a lot of fun together and I participated in some unique and rewarding activities. We’ve enjoyed a tremendous partnership over the years and we will maintain strong ties with the many people at GM we call friends.”
Official release after the jump: