For two of the world’s largest global automakers, Toyota and General Motors, it’s pretty much steady as it goes as the industry heads in an era of transition and change.
Dan Ammann, GM president, told the Automotive News World Congress that the car business is perhaps the single most challenging and complex business in the world.
“It’s a really interesting time in the industry,” said Ammann, who joined General Motors in 2010 after a career as a Wall Street banker. “We’re obviously we see more change in this business.”
He noted the task of GM’s senior management is to make sure the company is positioned for the changes. During the past 10 or 15 years, GM has evolved from being a more globalized company that shares ideas from throughout the company.
“For example, one of the things we did is put all of the marketing people in one room for the first time,” he said. Ammann, whose assigned tasks include turning Chevrolet and more importantly Cadillac emerge as true global brands.
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“It’s easy to underestimate the value of the personal relationship,” said Ammann.
Ammann also said despite the $500 million investment in Lyft, the car sharing service that is challenging Uber, GM doesn’t really have any plans to expand its footprint in Silicon Valley. GM’s current presence in Silicon Valley, where several automakers and even automotive suppliers have set up shop, is the right size and doesn’t need to expand.
With the introduction of the Chevrolet Bolt, GM has demonstrated that it is capable of taking on substantial technical challenges. For EVs, the two big obstacles have been the range and the price. “The EV have the potential to open up the market even in environment of low energy prices” because it can travel 200 miles on a single charge and costs only $30,000.
“We need to deploy capital in a very thoughtful way,” Ammann said. “We don’t need to be all things to all people at all time. We don’t have to be in a place,” such as Russia, if there isn’t a path to an adequate return.
Ammann also said, “The prospects of our company are not reflected in our stock price.”
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Ammann and Jim Lentz, chief executive of Toyota North America, also played down AutoNation CEO Mike Jackson’s comments earlier during the conference that the industry was reaching a plateau. Jackson said the industry has never done well when sales hit a plateau and slower sales invariably led to higher incentives and inventories.
Lentz noted he will take it if the industry plateaus at a record level of sales. Nor are there signs that incentives and inventories are climbing at Toyota or at major competitors.
Ammann noted the industry is facing what amounts to a downturn in South America, but sales are growing in Europe and the U.S. is very stable since the economy here continues to expand.
GM is a “dramatically more profitable” than we were before the last downturn, Ammann said. It also has a stronger, fortress balance sheet and inventories have been kept under tight control.
Lentz also said the shift to Texas, which will allowed Toyota to consolidate systems throughout its operations across North America, is on schedule and will be complete during the first half of 2017. Eventually, two thirds of the company’s existing employees will agree to make the move from Southern California to Texas.
Lentz said the reveal of the new Lexus LC 500 in Detroit, traditionally the show where Lexus makes its most important announcements, is part of Akio Toyoda’s efforts to change the image of boring vehicles. The LC 500 will carry a price tag of more than $100,000, he said.
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Lentz also predicted that the Toyota brands sales of the Prius will increased a one third despite, falling oil prices.
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