DETROIT – A financially weakened corporate titan with a global reach that was once seen as having near nation-like power, General Motors celebrated its centennial anniversary Tuesday, September 16 with the unveiling of an extended range electric vehicle -- the 2010 Chevrolet Volt -- which it hopes will recharge its prospects for the future.
In an extravaganza dubbed “GMnext Day,” the 100-year birthday party included a live global broadcast originating from its headquarters at Detroit’s Renaissance Center. Various pre-taped videos and live presentations also were made from facilities around the world showcasing its Hamtramck (Mich.) Assembly Plant where the Volt will be built.
GM’s celebration notably was more subdued than Ford Motor Co.’s centennial in 2003. Five years ago, Ford turned its Dearborn, Mich. headquarters campus into a mini amusement park.
GM’s birthday did feature a caravan of 100 Corvettes that traveled in a round-about way from the National Corvette Museum in Bowling Green, Ken. GM Chairman and CEO Rick Wagoner appeared to be calm despite the financial meltdown on Wall Street with the collapse of the nearly 160-year-old Lehman Brothers financial bank the day before and the collapse of AIG (American International Group), the 89-year old insurance company, that occurred while he spoke.
Soon after his presentation, Wagoner was on a flight to Washington D.C. to lobby for $25 billion in federal loan guarantees to help his troubled company. The loan guarantees were provided for in the U.S. 2007 Energy Independence and Security Act to help the domestic auto companies transition to cleaner, more fuel efficient and expensive powertrain technologies.
A History of Innovation
“One hundred years ago, in a world in which thousands of startups in the automotive sector came and went, our predecessors began an extraordinary experiment to bring together a bunch of auto companies led by strong and determined entrepreneurs, united under one roof, to build the best automotive enterprise in the world,” Wagoner noted. “One committed to bringing mobility to people around the globe.”
Being able to recognize the trend and lead the transition to the car put GM on the map. The automaker was founded on September 16, 1908 by William Crapo Durant. He was a wealthy Flint, Michigan businessman who made his money in the horse-drawn carriage industry by assembling an array of small businesses into a vertically integrated company that became the world’s largest buggy builder. Durant eventually lost interest in the carriage trade and moved to New York where he was dabbling in the stock market when he was approached by Buick’s frustrated investors who asked him to rescue the fledgling car company. After taking a test drive in a prototype Buick he became convinced that the auto would replace the horse and turned his attention to building a new company. He quickly brought together Buick with Olds Motor Works, Oakland (which later became Pontiac) and other firms. Since that time, GM has sold more than 450 million cars and trucks worldwide. It now has manufacturing operations in 33 countries and nearly 24,000 dealerships worldwide.
For much of its existence, GM has been the world’s largest automaker in terms of vehicle sales. This year, it seems likely that Toyota will surpass GM in terms of sales, though the Japanese giant has been easily beating all three of Detroit’s automakers in terms of profitability for many years.
Even so, GM has been responsible for many innovations that have helped shape the automobile and personal transportation. “From the electric starter and automatic transmission to the catalytic converter . . . from automotive financing to the business strategy of a car for every purse and purpose, GM has a long and storied tradition of technological and managerial innovations that have directly benefited the lives of automotive consumers around the globe,” Wagoner continued.
Premier of the Production Volt
One of the highlights of the centennial celebration was the debut of the production version of the 2010 Chevrolet Volt. Pictures of the vehicle were accidentally leaked on the Internet more than a week ago, but as GM Vice Chairman Robert A. Lutz noted, they weren’t the best of images, failing to show the car from the best angles.
“The Volt symbolizes GM’s commitment to the future,” Wagoner said, “just the kind of technological innovation that our industry needs to respond to today’s and tomorrow’s energy and environmental challenges.”
Earlier reports called the Volt a plug-in hybrid vehicle, however, GM is now calling it an extended range electrified vehicle (E-REV) because it is an electric vehicle. The automaker first displayed the Volt as a concept vehicle at the 2007 North American International Auto Show where it was called a “plug-in.” The vehicle generated so much interest that GM made plans to produce it.
Styled as a hatchback, the production version of the Volt will be placed on the same global compact car platform as the 2011 Chevrolet Cruze, which is a conventionally-powered car. It has enough battery power to run on electricity for 40 miles. Then it has a small internal combustion (IC) engine that switches on to power an electric generator, giving the car an extended range for “hundreds of extra miles.”
According to studies, most American commuters travel less than 40 miles per day, so the car’s batteries can be recharged at night. Unlike a hybrid, the IC engine does not directly power the Volt’s wheels.
“The Volt is carrying an extra 400 pounds of batteries,” said Jon J. Lauckner, GM vice president of Global Program Management who spoke with reporters after the production version’s introduction. “This car has regenerative brakes, so when you slow it down, you recapture some of the energy you used to accelerate that mass, unlike a normal car or truck.”
The Volt is being made to be as light as possible, reduce energy-hogging applications that reduce fuel economy and as cost effective as possible, Lauckner noted. To be cost-effective, as noted it is based on GM’s new compact car platform, so it uses more steel than aluminum in its construction.
“We use aluminum in areas where it makes sense,” Lauckner said. “There are many grades of ultrahigh strength steel than were available a couple years ago.”
The Volt is designed it so it could be sold around the world. So it incorporates European Union and North American vehicle safety standards and a right-hand drive version will be available.
Global Emphasis
As part of the festivities, there were film clips or video broadcasts from GM facilities across the world. Some facilities featured included the Lordstown (OH) plant where the Chevrolet Cruze will be produced, but also highlighting operations in Russia, Canada, Mexico City, China, Australia, Korea and India. The program seemed designed to remind everyone that the automaker is a global company as it de-emphasized North America – saving the section for the United States for last but giving equal footing to Canada and Mexico.
For example, one factoid noted that in 1950 about 80 percent of the world’s global vehicle production was in North America. Now it is about 16 percent.
Dr. David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., agreed that the GMnext presentation was created to show GM’s global operations and that the North American market is no longer as important to the automaker as it once was. Cole has GM family roots too. His father, the late Edward N. Cole, was the famed GM executive who helped develop the company’s small-block V8 engines in the 1950s, revitalized the Corvette and also directed the development of the Chevy Corvair (which was later pilloried by Ralph Nader for being rollover prone).
The Global Auto Industry and GM’s Place
The global automotive market has grown 11 percent – up 20 million units (passenger cars and light trucks) – between 1997 and 2007, according to Fritz Henderson, GM president and chief operating officer. Some of the industry statistics during the past 10 years are:
• Sales in Latin America are up 65 percent to 7 million units
• Sales grew by 28 percent or in Europe – especially with astonishing growth in Central and Eastern Europe – to 23 million units
• Volumes grew 54 percent or 21 million units in the Asia-Pacific region, which includes China.
“Our industry over the last 10 years has grown 32 percent to 71 million units… and we see substantial and tremendous growth over the next 10 years,” Henderson added.
In a global industry that has seen a sales surge, General Motors has posted staggering $15.5 billion loss in the second quarter of 2008, added to a string of sagging financial quarters during the past decade. The primary source of GM’s troubles is its traditional home market.
“In our North American core market, we are down 16 percent to 4.5 million units,” Henderson said. “This is where the battle will be won in the future. This is where we need to win.”
To meet the challenges of the future, GM is banking on its new products, such as the Cadillac SRX and Chevrolet Cruze to bring buyers back into its dealer showrooms. Eighteen of its next 19 vehicle launches, for example, will be cars and crossover vehicles with boosted fuel economy.
Henderson singled out the Oshawa Assembly Plant as “the jewel of our operations in Canada” and as a leader in vehicle initial quality and performance. He also mentioned that the company’s new state-of-the-art assembly plant in San Luis Potosi, Mexico, where the latest version of the Chevy Aveo mini-car will be built, as another example of GM’s global positioning.
GM is positioned for growth in Latin America where it is now making 1.2 million units or 13 percent of its global production volume. Its growth is up 20 percent in South America, up 50 percent in Africa, posting record sales in the Middle East, and its overall European market share is 9 percent with volumes up 14 percent during the past decade.
In Russia, Henderson noted, GM’s new St. Petersburg plant will help expand its sales in Eastern Europe, which are already running about 400,000 units annually.
In Asia Pacific, GM’s volumes up are 147 percent during the past 10-year period to 1.4 million units, or about 15 percent of GM’s global volume. China is GM’s “engine of growth” where its Buick, Chevrolet and Cadillac brands are showing tremendous strength.
Overall, during the past 10 years, GM’s volumes are up 10 percent to a total of 9.4 million units, Henderson noted.
Toyota, meanwhile, is forecasting that it will sell a total of 9.5 million units worldwide by the end of the year and is likely to take the “sales crown” from GM while it already long surpassed its American rival in profitability.
Looking for a Hand
Wagoner spoke to reporters after his speech about the $25 billion in loan guarantees that the domestic automakers were seeking from the U.S. federal government.
The idea for the loans were part of the U.S. 2007 energy legislation that mandates raising the corporate average fuel economy (CAFE) standard to 35 miles per gallon by 2020. This represents a fuel economy increase of 40 percent in 12 years and an enormous financial challenge for the auto manufacturers.
“The auto loans were covered under the energy legislation… $25 billion is a fair amount to make the investments that we need,” Wagoner said. “The funding is only available for products and technologies that represent significant changes and increases in fuel efficiency. It’s not for a redo on current products.”
Given the difficulty that GM, Ford and Chrysler are having obtaining credit – in 2006 Ford lined up $18 billion in financing to give it cash liquidity, but one of its creditors was Lehman Brothers – the federal loan guarantee would account for a small fraction of the auto companies would need.
The crashing of the financial markets “does not help us,” Wagoner said. “Financing will be tighter for consumers and every industry. It signals tougher economic conditions ahead. We’ve put together conservative (sales) scenarios… We’ve done some self-help by taking out $10 billion in costs… this regard.”
Caravan from Kentucky
Despite the financial storm on Wall Street and the tough sales environment for GM, there was still a bit of a party atmosphere at Detroit’s “RenCen” with little cupcakes set out with “GM” and “next” printed in the frosting.
On display along the Detroit River, with the Canadian city of Windsor visible to the south, were 100 Chevrolet Corvettes that had been part of a caravan of cars from the National Corvette Museum in Bowling Green, Ken. Among the participants were Mike Sizemore of Westminster, Md., and Larry Burton of Somerset, Ken.
The members of the caravan were treated to a separate presentation including an in-depth look at an E85 alternative fuel Corvette. E85 is made from 85 percent ethanol and 15 percent gasoline.
Traveling with his 13-year-old son, Joshua, Mike Sizemore said that the caravan started at the Corvette Museum, traveled to St. Louis, where there had once been a plant to produce ‘Vettes, then to Indianapolis, before eventually coming to Detroit.
“I’ve had a Corvette since I was 17, so that’s 22 years. I loved the car, performance and styling. Everyone stops you and asks all about it,” Sizemore said, who made the trip in his 1990 Corvette.
He also had three other ‘Vettes in his collection, including a 1969 Stingray, which was the model year that he was born. His 1990 model has some special elements because it was the last year that the 1984 body style was made before Chevy produced the ZR-1 styling, yet it had an updated interior that was used for the 1990 -1995 models.
“It’s also painted turquoise metallic with black interior, and they only made 589 of that color, about 10 percent of their production,” he added.
Burton, who was touching the wax on his 1988 convertible, said that he had his car for 20 years and used it on a regular basis.
“It has 42,000 miles and for a 20 year old car that’s pretty good,” Burton said. “I fell in love with Corvettes when I was a kid. The first one I remember was a 1958 when neighbor bought one. I thought that it was a nice car.”
Originally, Burton owned a 1965 Corvette that he bought from his cousin. But after getting married with children on the way, he had to sell it. Years later, once his kids were grown, he bought the 1988 ‘Vette, again from his cousin.
“I bought my ’65 off of him when he got married. When I got to looking for a replacement, he was looking for a new one and had this one for sale,” added Burton.
Got to Have Products
Reiterating messages that he has presented before, Lutz noted that for General Motors to succeed in the future, it needs “to produce vehicles that are absolutely compelling to the customer.”
“You can have excellent quality, excellent engineering, road handling quality, fuel economy, but the difference between brands on those things is growing smaller,” Lutz added. “The one big differentiator that’s left is design. You’ll either love with the vehicle or not. Lately we’ve been doing a lot of things that will make you fall in love with whether it’s the Cadillac CTs, the Malibu, the global Insignia… or the new Chevy Camaro.”
As GM enters its “next 100 years,” it has to try to get out of 2008 with some semblance of a foundation for the future. Other American corporate icons – Fannie May, Freddie Mac, Lehman Brothers, AIG and Bear Sterns – with long histories have recently tumbled and it looks like a rough road ahead for the automaker.
Related Items:
