11 takeaways from GM’s investor day

It’s been nearly five years since General Motors was bailed out during the recession, but it’s still taking some time for investors to warm up to the world’s largest automaker. GM’s stock price has…

It’s been nearly five years since General Motors was bailed out during the recession, but it’s still taking some time for investors to warm up to the world’s largest automaker. GM’s stock price has been stuck near the $30 mark since early 2016 and lags behind its rivals, including Ford and Tesla.

Last month’s GM earnings were a mixed bag, with earnings per share of $1.58, up from $1.08 a year earlier, but a decrease in net income, which fell to $3.6 billion from $4.4 billion.

While Wall Street took a wide range of views on the results — 10 analysts gave GM either a hold or an underperform rating — its CEO Mary Barra, who has slowly started the rebuilding process, expressed confidence in a positive financial outlook. She spoke before investors at GM’s investor day on Tuesday, Sept. 11, telling them that GM would enjoy double-digit profit growth this year, and repeated her confidence that investors would see financial benefits in “not just a couple of years but a decade from now.”

Here are some other highlights from her presentation:

It won’t pay to use GM’s vast array of vehicle features. “You should be thinking about how you can use the state-of-the-art technology in every vehicle you own,” she said. At the company’s supplier day this week, Barra noted that GM is rolling out a new digital marketing tool called “CADO,” or Brighten Your Drive Experience, which it hopes to use in product marketing. CADO is designed to take a dashboard video of a road trip, scan the route, cut out all the features which don’t matter and hand out those which do. The idea is to give customers a sense of the technology and the features of the car before they buy it.

“We have to change the messaging,” Barra said. She emphasized the need to “change the narrative” to make the car something other than “boring, heavy and old.”

GM is building fewer cars, but investing in new products. General Motors will be building fewer vehicles, but that doesn’t mean “delivering fewer cars to customers” and “increasing the innovation of those vehicles.” This year, the automaker will continue to sell about 3 million vehicles. But it will be introducing 38 new and redesigned vehicles. Barra said that eventually GM will be “very successful” in making those vehicles, thanks to a move to the flexible chassis design, which uses more components instead of parts, as well as the latest engineering on fuel efficiency and safety features. “People have this perception of car builders as basically building cars that are mass produced, and very uninteresting to drive,” she said. “We want to be the real engineer and create the real experiences and really, frankly, build modern cars that are exciting.”

Tesla is going after a segment of the luxury market that is going to “blow us away.” Barra said that GM won’t be pursuing an electric crossover in the $50,000 price range, where Tesla is now selling the Model X. “The market will decide when to move to these higher-priced electric vehicles, and we do not see it anytime soon,” she said. “There are other competitors in the marketplace who are setting themselves up in that area, and we believe our customers will want a product like that.”

“But we do see that we can maintain our leadership and then grow into that segment,” she added. “Not because of our competition but just because our customers are asking for it.”

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