Brave new world for Holden

GM HOLDEN will become part of a powerful new Asian-based global operation under the ‘New GM’ that emerged from General Motors’ Chapter 11 bankruptcy on Friday.

In a dramatic swing to the east, where GM operations have been smashing sales records in contrast to the company’s decline in the US and Europe, all of GM’s overseas operations will be managed from Shanghai under a new branch, GM International Operations.

It will be run by GM Asia Pacific president Nick Reilly, who has been promoted to GM vice president of international operations under the restructuring announced by GM CEO Fritz Henderson.

The decision reflects the rise of China and Korea in the GM orbit and the decline of GM Europe, where Opel, Vauxhall and Saab are all being sold off.

In China, GM and its local partners are on target to sell more than 1.6 millions vehicles this year, based on record first half sales of 814,441 units – up 38 per cent.

The move places Holden closer to the epicentre of GM’s overseas operations under Mr Reilly, who has overseen GM Holden as part of his Asia Pacific division.

Left: GM vice president international operations Nick Reilly.

Just last weekend, an Australian government delegation led by trade minister Simon Crean and industry minister Kim Carr visited China to push Holden’s case for stronger design and engineering links with GM affiliated car-makers, including Shanghai Auto and Wuling.

The decision by GM to put all of its overseas operations under one umbrella has the potential to break down borders between global regions and open up export opportunities for GM operations such as Holden, which a Holden insider said had a reputation within GM for quickly identifying opportunities and acting on them.

Such initiative is to be encouraged under the New GM – renamed General Motors Co – which has inherited the good parts of the old GM under the US government-sponsored and financed restructuring.

In the US, Chevrolet, Buick, Cadillac and GMC have all been switched into the new company, along with 34 of the 47 factories in North America. Pontiac will be phased out and Saturn and Hummer sold.

The number of GM model nameplates will be slashed to 34 under the four “core brands”, according to Mr Henderson, who said: “Business as usual is over at GM.” The dealer network is being cut from 6000 dealerships to 3600 by the end of next year, which still makes it the largest auto retail network in the US.

Mr Henderson, who will take personal responsibility for the North American market, has pledged to slash GM’s US executive workforce by 35 per cent to flatten the organisation and speed decision making. A single executive committee has been created to make decisions more quickly.

Mr Henderson said GM planned to hit the ground running with new models and 100 per cent plant production capacity by 2011.

“We expect to take the company public again as soon as practical, starting next year, and to repay our government loans as soon as possible,” he said. “We are required to pay off the loans by 2015, but our goal is to repay them much sooner.” Mr Henderson confirmed the appointment of former AT&T phone company CEO Edward Whitacre Jr as the new GM chairman, and announced that Bob Lutz would reverse his retirement plans to take up a new role as vice-chairman “responsible for all creative elements of products and customer relations”.

The new GM begins life with US debt of $US11 billion ($A14.12b). The US treasury has become the biggest shareholder, holding 60.8 per cent, with the United Auto Workers union’s retiree medical benefits trust holding 17.5 per cent, the Canadian and Ontario governments 11.7 per cent and the “old GM” – mainly bondholders – 10 per cent.

The remnants of the 100-year-old GM will be liquidated.

Mr Henderson said GM had launched its new era with a clear and simple vision: “To design, build and sell the best vehicles in the world.” “A successful auto company needs to focus on both the cost and revenues sides of the business,” he said.

“Success on the revenues side means building the stylish, high-quality, fuel-efficient vehicles that customers want – and getting them to market fast.”

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