GM CEO Mary Barra picks profits over market share – USA TODAY
General Motors will continue to emphasize profitability of each vehicle sold in the U.S., even if it results in declining sales and a lower market share, CEO Mary Barra said Tuesday morning before meeting with shareholders.
Through the first five months of 2016, GM has tried to reduce sales to daily rental companies because those aren’t as profitable as retail sales directly to consumers at dealerships. But that has resulted in several consecutive months of sales declines from a year earlier.
Through May, GM’s share of the U.S. new vehicle market has dropped from 17.7% to 16.6%, the lowest it has been, at least since World War II.
“We have the most significant increase in retail market share growth and we aren’t changing from that strategy,” Barra said. “Not only does it strengthen residual (resale) values but it also will position us well if and when the cycle turns.”
Investors also have been harsh, as they have been toward most automakers. GM shares closed Monday at $29.99, about $3 below its initial public offering price in November 2010, despite the company’s multiyear plan to buy back $9 billion of its own stock.
The U.S. auto industry is on track to break last year’s sales record of 17.5 million, but GM has seen its market share fall as it de-emphasizes sales to daily rental companies in favor of more profitable retail sales.
The company expects to make a profit in Europe this year for the first time since 1999 and even in China, where economic growth has slowed, GM’s sales have continued to increase, especially in China’s medium-size cities.
GM also has made large investments in new mobility, first by buying a 9% stake in ride-sharing service Lyft in January. Then, last month, it acquired Cruise Automation, a three-year-old San Francisco start-up that had developed a product that can enable a car to control acceleration, braking and steering autonomously.
Multiple media reports said GM paid $1 billion for Cruise Automation.
As automakers and technology partners push to give vehicles increasing capability to drive themselves, there is a debate about how far the concept should be allowed to go.
Google, for example, is aiming at achieving what government regulators classify as Level 4 autonomy, which could allow a manufacturer to take away certain modes of human control, even the possibility of removing the steering wheel and pedals.
Asked whether GM is ready to go that far, Barra was careful.
“It is very important that we demonstrate safety,” Barra said. “Having that capability with the steering wheel and the pedals still in the vehicle is good way to demonstrate safety. We want to lead in autonomous, but we want to do it safely.”
The annual shareholders meeting began at 9:30 a.m. There were four issues on which shareholders voted. One was to elect 12 members of GM’s board of directors, including 12 candidates recommended by the company. They were all elected with an average of 96% of voting shares.
One shareholder, John Lauve, nominated two outside candidates for the board not preapproved by the company. Neither received enough votes to be added to the board.
In a proposal that allows shareholders to express approval or doubts about the compensation of GM’s five highest-ranking executives, 62% of shares were voted for the compensation plan. Even if a majority of shares were voted against the executive pay plan, the vote would have no binding effect.
On a proposal to ratify GM’s selection of Deloitte & Touche as its certified auditor, 99% of votes were cast to ratify the choice.
Finally, a proposal calling on GM to support the Holy Land Principles was rejected by a 97% to 3% margin. The principles, as described by Father Sean McManus, require American companies to pledge they will follow fair employment practices toward both Israeli and Palestinian people in their operations in the Holy Land.
During a question and answer period, civil rights activist Jesse Jackson praised Barra’s leadership and the company’s performance, but he urged GM to recruit more African-American dealers.
“Among the 4,200-plus GM dealers throughout the country, 49 are African-American owned,” Jackson said. “We took a big hit in the Great Recession and we haven’t fully recovered.”