General Motors CEO Mary Barra said the next few weeks are crucial for the automaker to rebuild the van inventory, keep workers healthy and apply “laser-like focus on our structure of costs ”.
Barra made the comments in a virtual fireside chat with Credit Suisse on Tuesday. GM CFO Dhivya Suryadevara joined her on the chat.
GM restarted most of its US factories on May 18 and this week added second and third shifts to most of them. Barra said suppliers are accelerating and GM will continue to add changes to all of its factories.
GM’s underlying fundamentals also remain solid, said Barra, despite the coronavirus pandemic that forced Detroit Three automakers to idle all of their North American assembly plants in late March. GM ended the first quarter with $ 33.4 billion in automotive cash.
But when it comes to having cars on dealership grounds, GM is struggling to catch up.
“The inventory is definitely tighter, especially when it comes to trucks,” said chief financial officer Suryadevara. “The way to mitigate it … is to speed up installations. The focus will be on vans and SUVs. Then get them to the dealers as quickly as possible. ”
GM is working to prioritize the construction of the fastest trim levels to help fill the inventory pipeline. The pickups are a “priority order,” said Barra.
GM’s pickup accelerated last month derailed because it couldn’t get the parts flow it needed from Mexican suppliers to support the return of second-quarter workers to the Flint Assembly and Fort factories Wayne Assembly of GM. GM builds its heavy trucks in Flint and its light vehicles in Fort Wayne, Indiana.
Vehicles are already facing below normal supply due to the UAW’s 40-day strike against GM last fall. Vans, which have large profit margins, are crucial to GM’s bottom line.
“If there is a supply problem, we will prioritize the trucks,” said Barra. GM is ready to make production changes if necessary, she said.
More: Thousands of GM UAW members said to stay at home, production of pickups stalled
GM is also monitoring the coming weeks for a possible second wave of the coronavirus, said Barra. She said GM is paying attention to the costs as the country gets closer to business as usual.
“GM will come out with a cheaper overall system based on what we have learned and found ways to cut costs,” said Barra.
These include eliminating the complexity of vehicle production to build only the trim levels that customers will buy without the need for large discounts. Barra said, “There has been a lot of work there. “
Barra did not mention planned layoffs as a cost-cutting measure.
She added that the coronavirus pandemic “really requires you to watch every single thing you do and watch every line item. We have found things that we do not need to do and found things that we can do more effectively. ”
Another way to save money is to more aggressively promote the GM Shop website, Click & Drive, which can perform most vehicle transactions online. GM said it was a very effective way to match customers, vehicles, dealers and inventory.
To survive the pandemic, GM withdrew its 2020 forecast and suspended quarterly share buybacks and dividends during the quarter, saving $ 2 billion. GM also said it would withdraw $ 16 billion from its line of credit to increase liquidity in its war chest.
GM said that its 69,000 employees were required to defer 20% of their cash compensation for six months starting April 1. GM executives will benefit from an additional 5% pay cut in addition to the 20% cash compensation deferral for a total of 25% pay deferral and reduction with top executives such as CEO Mary Barra, taking an additional 10% pay cut for a total of 30% deferral and pay cut.
More: General Motors posted net income of $ 294 million in the first quarter, down 87%
More: GM suspends dividend and takes other measures to store cash during a pandemic
Contact Jamie L. LaReau at 313-222-2149 or [email protected]. Follow her on Twitter @jlareauan. Learn more about General Motors and sign up for our automotive newsletter.
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