GM is on the offensive. After years of a mediocre presence, GM is on a mission to capture market share, and they have an aggressive strategy based around the addition of 7 to 10 new vehicles to its current lineup. CEO Fritz Henderson has been championing for aggressive development of new cars so that GM can capture heavy market share once the market rebounds, according to BusinessWeek.
A report released by Bank of America Merrill Lynch said that GM would have o introduce a numb roof new models to fully replace the market share that it had lost; its current lineup is only capable of recovering approximately 45% of lost market share. Henderson has said that in a mart of 10 million cars, GM would need to lock down a market share of 18.5% to start to turn a profit.
All this comes though amidst a daunting task. GM has drastically cut their new-product budget down to $3 billion, compare that to the $8.5 billion that they have been spending annually over the past decade and one wonders how they are possibly going to roll out new models.
To add 10 new models over five years, GM is looking at at least $5 billion out the door. The company has recently cut 5,400 white-collar staffers and plans to chop another 1,300 by the end of this year. Despite all this, GM has a healthy balance sheet as they have access to over $33 billion in government funds in addition to the almost $20 billion they borrowed before bankruptcy.
– By: Stephen Calogera