The big drop in oil prices isn’t prompting General Motors to change its plans or strategy, GM Chief Executive Officer Mary Barra said this week.
Barra was asked about the drop in oil and gasoline prices, which are down 55% in the past six months, during a discussion at the Automotive News World Congress with Keith Crain, the publication’s editor-in-chief.
“I can tell you this. It hasn’t changed our plans one bit. I think everyone is a little perplexed. I don’t know what it’s going to be,” Barra said in reply to the question by Crain. Barra also admitted the recall crisis made her first years as GM’s top executive very difficult. “We’ve learned a lot,” she said.
However, GM has absorbed the lessons from recalls, particularly the recall of small vehicles with a faulty key design that has been linked by 30 deaths. “Clearly we have to make sure this sort of thing never happens again,” she said.
Under questioning from Crain, though, Barra insisted GM senior management and top engineers were basically unaware of the problem until it was uncovered during the pre-trial testimony of a senior GM engineer, who had slipped in a part change.
“Read the Valukas report,” Barra added, denying that the concern about the faulty ignition switch had been known by other GM executives, including some who were reporting to her in previous assignments.
GM has now overhauled its procedures and done it quickly, added Barra, who noted the tempo of change across the entire business has sped up.
Barra, who became GM’s first female CEO a year ago, also indicated that the notion that GM is large, plodding bureaucracy is fundamentally inaccurate today. “We’ve changed the way we do conferences and the way we do employee evaluations,” she said. In addition, GM and its employees have absorbed the lessons both from the 2009 bankruptcy and the ignition switch recall.
The General Motors of today is very different than the one she joined in the early 1980s, she said. For one thing, the company now pays far more attention to customers than the GM that existed when she started working in plant in Pontiac as a co-op student.
At the time, nobody talked about winning a customer for life.
On the other hand, she wants GM to be known for its products and services. “I want profitable marketshare,” she said.
Barra also said she makes time to keep tabs on the company’s extensive operations in China, India, Australia and South America. “Opel has surprised a lot of people. We’ve gained market share for two consecutive years at Opel,” she added. “We have strong leaders in each of the regions. But if I see something, I’ll call.”
(GM forecasts improved profitability in 2015. For more, Click Here.)
Barra’s answer to the drop-in-the-price-of-oil question was basically the same line that executives from other companies have been saying all week.
Earlier in the week Fiat Chrysler Automobiles chief executive Sergio Marchionne said he wasn’t altering FCA’s five-year plan in response to the oil price drop. People are skeptical it’s going to last, one executive said.
(Click Here for details on Cadillac’s aggressive product plans.)
However, Reid Bigland, the executive in charge of FCA U.S. sales and president of the Alfa Romeo brand, said vehicle electrification plans automatically become more difficult to propose.
Elon Musk, founder of Tesla, the electric car company from Silicon Valley, said carmakers must continue to invest in electric vehicles even though the price of oil could remain low for a number of years. “We’re doing everything we can to encourage other carmakers to build electric vehicles,” said Musk, who warned the conference about the planet can no longer sustain carbon emissions.
(To see more about the “ruinous” practices threatening automakers, according to Marchionne, Click Here.)
“The opportunity for electric transport is tremendous,” he said. “It will be better for the world,” adding electric vehicles makes sense even though oil prices have dropped. Carbon emissions remain a huge problem, he said.
“We’re using up the carbon carrying capacity of the oceans and the atmosphere. It’s like letting the garbage pile up in the streets and no one is paying to remove it,” Musk told the conference.