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New GM brass speaks with a brutal candor

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New GM brass speaks with a brutal candor



Any lingering doubts should be gone now about why Rick Wagoner and his preordained-to-fail successor Fritz Henderson had to depart General Motors as part of the company's federal rescue, bankruptcy and reinvention.

Neither Wagoner nor Henderson, both lifers at GM before being successively ousted as CEOs last year, could have spoken credibly with the brutal candor that GM's new top brass did Tuesday in an all-day briefing for Wall Street analysts.

The aim clearly was to whet investor appetites for an offering of stock later this year or early next in the New GM, now 61% owned by the U.S. Treasury. And the sales pitch was all about how GM's speed, culture and philosophy are light-years removed from the bad old days of Rick and Fritz.

"If all we have to offer is the same thing, only smaller, everybody in this company knows that's not good enough," said Steve Girsky, GM's vice chairman for corporate strategy. "We need to prove that we're different and that we're doing things differently here."

"This company used to invent ways to give away money," he added, alluding to the Old GM's penchant for big rebates to move big inventories of cars from dealer lots.

Chief Financial Officer Chris Liddell, who joined the automaker from Microsoft in January, said he expects the New GM to be a strong, investment-grade company, which it was for most of the last century before "we just lost our way in the last 10 or 15 years."

Liddell said GM's ability to boost sales while reducing incentives is based on having "vehicles that people want to buy, rather than vehicles you're bribing people to buy."

Ouch! It must sting for Wagoner and Henderson -- and other longtime GMers, many still on the payroll -- to hear those putdowns.

But the fact is, even if Wagoner or Henderson had been allowed to remain CEO, and actually implemented the many changes made under new CEO Ed Whitacre, neither would have had the credibility to convince a still-skeptical nation of car buyers and investors that GM and its remaining brands have solid value.

And make no mistake, millions of skeptics remain.

Remember, GM is a company 33% smaller in sales volume than it was five years ago, a company that has reported just one small quarterly profit since exiting Chapter 11 bankruptcy last summer.

As I was listening to the GM financial presentation via conference call Tuesday, I flipped through the new August edition of Consumer Reports magazine, which places GM's much-praised Chevrolet Malibu only in the middle of the pack among 2010 family sedans -- behind Nissan Altima, Honda Accord, Toyota Camry, Ford Fusion and Subaru Legacy. The Chevy Impala was relegated to 19th among the 20 sedans ranked, ahead of only the Dodge Avenger.

Clearly, GM's new leaders have plenty of work to do in a still shaky economy.

"We need to prepare for a lot of volatility going forward," Girsky said.

He's got that right.



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