Full Text Of Zarrella Speech At SEMA

October 30, 2001

RON ZARRELLA: Thank you, and good afternoon.

It's an honor to address an audience so passionate about great cars and trucks. and so committed to the automobile as an art form.

The energy, enthusiasm and creativity you bring to your businesses is essential to moving our industry forward.

It's for this reason, among others, that GM takes seriously our featured mark status at SEMA this year, and we hope that our involvement continues to grow.

In fact, several members of our North America senior leadership team are here with me today to show our commitment to SEMA, including the newest member of our GM team, Bob Lutz.

Bob, please stand and say hello.

I'd also like to recognize all the participants of the Michelin Challenge Bibendum who are with us today.

GM was proud to participate in this real-world demonstration of environmentally innovative vehicles.

And, I'm pleased to announce that GM had the only car or light duty truck hydrogen fuel cell vehicle that made the complete 230 mile drive from California Motor Speedway to Las Vegas.

How about a round of applause for all the participants?

When I accepted the invitation to speak last April, we all lived in a completely different world.

Like every one of you, I was shocked and angered by the terrorist attacks last month in New York, Pennsylvania and Washington D.C., and deeply saddened by the tremendous loss of life that occurred.

Our thoughts and prayers have and continue to be with the families of those that lost their lives.

That day in September -- and the ensuing actions taken by America and our allies to end terrorism -- proves how suddenly our world can change ... which is why it's so difficult to determine the ultimate economic impact on our country and industry.

One thing we do know ... is that America's auto industry, with all its retailers, suppliers and related businesses, is crucial to keeping our economy moving forward.

The U.S. auto industry is one of the key drivers of our economy.

By themselves, U.S. auto manufacturers and their first tier suppliers account for 6.5 percent of U.S. manufacturing output, and nearly 4 percent of U.S. Gross Domestic Product.

When we include auto sales, servicing and other related automotive industries -- everything from interstate trucking to car rentals -- those numbers grow to more than 6 percent of U.S. Gross Domestic Product.

In terms of employment, U.S. auto manufacturers and our first tier suppliers employ about 1.2 million people, with another 2.6 million employed in auto sales and servicing.

Related automotive industries add another 3.2 million jobs.

All told, the nation's automotive transportation sector accounts for some seven million jobs, or about 5.4 percent of the total civilian workforce.

And SEMA's 4,600 plus corporate members, who produce and sell automotive aftermarket products and services, have significant influence on the industry as a whole.

According to SEMA, retail sales of performance parts and accessories are nearly $25 billion dollars with an annual growth of 7.5%.

That's more than the gross domestic product of many of the world's nations.

I bring all of this up because I believe our industries have a central role to play at this critical time in our nation's history.

At GM, we believe we have a special responsibility, as the largest U.S. automaker, to keep our factories running, our suppliers working and our employment stable.

The best thing we can do right now is to help stimulate the economy by making it easier, and more affordable, for Americans to purchase vehicles.

That, in turn, supports the factory workers and parts suppliers and hometown auto dealers and others, including SEMA members, who depend on a healthy auto industry for their livelihood.

GM leadership has met with President Bush and key members of the administration to talk about the state of the U.S. economy ... and what we can do to restore consumer confidence and help keep the economy moving.

I am proud of the leadership role GM has taken, and the President and administration have been very appreciative of our efforts.

One of the great leaders of our time, Martin Luther King, once said ... "The ultimate measure of a man is not where he stands in moments of comfort, but where he stands in times of challenge."

Well, we are living in challenging times today, and GM's answer for that is to continue moving forward with innovative products and technologies that will lead the market.

Innovation has become a mind-set at General Motors... it has to be if we are going to be competitive.

The horrific acts of a few are not going to deter us from this course -- these acts only serve to make our resolve stronger.

So, I want to talk about innovation today ... and the responsibility that GM and all of you have to stay focused on running our businesses aggressively and creating new products that fulfill our customers' needs.

The fact is, none of us really know what the "next big thing" is going to be, but our best chance of discovering it ...is by focusing on innovation, everyday, and in everything we do.

Let me give you a few quick examples from our experience at GM, beginning with OnStar.

While others are "talking" about the telematics revolution, GM is leading it.

As a result, OnStar currently has about 1.7 million subscribers and growing.

Satisfaction with the service, as well as renewal rates, are very high and increasing.

As important, OnStar is becoming an industry standard.

OnStar has become the reference brand in the telematics category, much like Xerox is for copy machines and Kleenex is for tissues.

OnStar has had more than 10 million interactions with customers and is touching customers in every county in the U.S. and all provinces in Canada.

In fact, OnStar currently has 80% market share, with the GM brands as well as Lexus, Acura, Audi and Subaru.

That's what innovation will get you ... a dominant position in the category.

Although every automobile manufacturer has plans to implement telematic services in the next few years, we believe GM's scale and volume gives us at least a two-year lead over rivals.

We're also underway right now with the launch of XM Satellite Radio in Cadillac Sevilles and DeVilles, which is further illustration of the innovation mindset we have at GM.

With XM Satellite Radio, we can offer customers up to 100 channels of digital-quality sound and provide coast-to-coast coverage of music, news, sports, talk, comedy and children's programming.

Cadillac is the first and only nameplate in the industry to offer XM Satellite Radio as factory-installed equipment.

And we're not stopping there -- we'll offer XM Satellite Radio on more than 20 GM models next year, including small cars.

This spirit of innovation is also in many of our latest truck products.

Our new TrailBlazers, Envoys and Bravadas with the all-new Vortec 4200 inline 6 have the power of an eight-cylinder engine with the efficiency of a six.

The new 345 horsepower, all wheel drive Cadillac Escalade is developing a cult-like following, and we are building every Escalade we can.

It's the "hot" new vehicle for celebrities from pop stars to athletes, who are buying and customizing their new Escalades.

This year, GM also introduced the first vehicle in the world with an innovative midgate ... the Chevy Avalanche.

This new midgate feature is so innovative that Popular Mechanics magazine will present Avalanche with the Design and Engineering Award in their December issue.

We suspect there are a few more major awards coming as well !

And we broke the mold for Buick this year with the all-new Buick Rendezvous crossover, which offers all wheel drive, 7-passenger seating, and a very affordable base price.

Innovation will be a strong selling point in many of our all-new products that go into production in the next 12 months.

The Saturn VUE crossover starts production next month, and brings original Saturn innovations like great interior flexibility and dent-resistant polymer body-side panels to the compact SUV market.

And it's the first entry-level SUV with a continuously variable transmission.

The athletic Pontiac Vibe coming after the first of the year provides the functionality of an SUV, the emotion of a coupe or "hot" hatch, and the ease of use of a sedan.

Vibe has its own unique look and feel ... and will also have available all wheel drive, and a unique dual-rail track system for stowing and securing cargo.

The Cadillac CTS also comes to market in the first quarter of 2002.

It is the first new Cadillac to combine both the "Art and Science" of Cadillac for the 21st century.

As great as it looks, the CTS performs even better.

It has all-new rear wheel drive architecture that was developed on Germany's torturous Nurburgring test track, where Porsche, BMW and Mercedes do their performance development work.

Additionally, we have several future enhancements planned that will keep CTS continuously fresh and a leader in its category.

In the not too distant future, look for a special performance series from Cadillac.

This performance series will begin with a special version of the CTS featuring performance-inspired body work, a beefed-up chassis and braking system, and extensive powertrain enhancements.

This will be an ultra exclusive, high performance version of the CTS engineered and developed by GM.

This high performance version CTS will be a serious player in the luxury performance market.

We are confident that our CTS performance version, introduced after the initial launch, will give Mercedes' AMG line-up and BMW's M series a run for their money.

A legitimate performance series is increasingly vital for Cadillac's image across the global automotive stage.

Such a performance series will also prime the pump with aftermarket tuners like yourselves.

You'll definitely want to stay tuned for this one.

Also coming next year is the XLR Luxury Roadster from Cadillac ... and it too is being developed at Nurburgring.

Plus, a product I know many of you are clamoring for ... the Chevy SSR hardtop convertible.

And GM's first new extension of the Hummer brand ... the Hummer H2.

That's a pretty impressive list of innovative new products, all coming from one manufacturer in the next 12 months ... and I've really only touched on a few of them.

All of the great products we have in the market today and those coming give SEMA members a lot of opportunities to create new customization, personalization and performance items for GM vehicles.

We are developing vehicles that are selling well and that more people want to customize.

We know that you have a lot of vehicle choices to work your customizing magic.

We hope that more and more, you'll turn to GM products as your vehicles of choice.

Importantly, from your standpoint and ours, we're going to keep GM's product momentum building... and you will continue to see examples of industry-leading innovation in our future products coming beyond 2002.

For example, we'll introduce Avalanche functionality in the midsize truck segment, but with a new twist ... an exclusive sport utility truck.

Chevrolet will build on GM's industry leadership in trucks with an all-new entry level SUV crossover.

And the next generation Malibu will include one version with an innovative new body style and features that will provide breakthrough design and bring new functionality to cars in general.

We think this new Malibu will redefine the mid-size market.

Beyond our vehicle programs, innovation can be seen in our core technical competencies -- for example... powertrains.

A company with the breadth and market presence of General Motors has to have powertrains that fulfill a wide spectrum of needs.

We sell more vehicles than any other manufacturer, and are on pace to sell over five million cars and trucks in North America again this year.

Doing this demands a real range of powertrains.

GM has a strong tradition of leadership in V8 powertrains.

Over the years, we've led the market with best-in-class Dual Overhead Cam V8s, such as our Northstar.

And we have the best-in-class Overhead Valve V8's -- both in trucks with our Gen III V8 ... and in cars with the 405 horsepower 5.7 liter in our Corvette Z06.

We are determined to achieve the same best-in-class standards and market coverage with our V6 powertrain technology for the 21st century.

No other company in the world has the breadth of products using V6 engines that GM does ... which makes our future V6 powertrain decisions challenging, but also an opportunity.

When we began the advanced development work on our next generation of six cylinder engines, we looked across the market and determined that there are two distinct clusters of consumer needs in V6 powertrains.

One, mainstream customers who want a dependable solid powertrain that offers a combination of high efficiency, durable operation... and most importantly, contributes to the overall value of the entire vehicle.

And two, a more discerning, technology savvy group of customers who demand the latest and greatest technological advancements for increased sophistication and refined performance.

GM has developed a global powertrain strategy that speaks to both ends of the market.

Our mission is to produce the best of both worlds.

For mainstream applications in the future, we have totally rethought and redefined the concept of Overhead Valve architecture.

And in so doing, we are going to produce a new family of Overhead Valve engines designed for the emerging demands of the 21st century.

We remain committed to Overhead Valve technology for several reasons:

First, our new Overhead Valve architecture will be a thoroughly modern design from every standpoint:

- Layout; - Performance and efficiency; - Package size; and - Weight.

Second, it takes full advantage of today's state-of-the-art electronics which includes the use of Electronic Throttle Control.

Third, it gives us the ability to deliver the efficiency demands of the new century with displacement on demand as an integral part.

And fourth, it's elegantly simple for high performance, low cost and great reliability.

These engines will be available in variants up to 230 horsepower -- and will maintain their current cost and fuel economy leadership for passenger car V6 engines.

Another new V6 engine family will address the needs of consumers who demand more sophisticated technology and refined performance.

For these consumers, we have under development a new high-performance Dual Overhead Cam V6 engine.

This will be an all aluminum, 60-degree V6 engine with variable cam phasing that supports our vision of having GM known for designing and building the world's best powertrains.

This next generation Dual Overhead Cam technology will feature multiple variants with some naturally aspirated versions generating over 250 horsepower.

They will also be capable of being used in front, rear and all-wheel-drive applications.

The engine is small and compact enough to fit in many different platforms, which is further facilitated by an oil pick-up design that allows multiple installation angles.

Higher performance additions, some of which you'll see in the Cadillac performance series I mentioned earlier, will be available with turbocharged and direct injection options.

We're very excited about the future applications for this new engine ... stay tuned for more information about our development.

By taking this multi-faceted approach to the V6 market, GM will have the breadth of powertrains we need to match our breadth of product offerings and fulfill our consumers' diverse needs.

I hope by now you're getting the picture of GM as a company that is today driven by innovation and committed to product leadership.

Your businesses also have a strong tradition of innovation.

And like General Motors, I believe you have the commitment to push forward with creativity and new features and accessories that will continue to drive the market for customization and personalization even higher.

Frankly, it is men and women like you who represent the core strength of America's economy.

The innovation and the entrepreneurship of small to midsize businesses -- like SEMA member businesses -- have always defined our economy and kept America strong.

Small to midsize businesses like yours employ more than half of America's non-farm workforce...and contribute over one-half of the private Gross Domestic Product in this country.

And clearly, innovation is the driver that makes these American businesses strong.

Put in terms that all of us at SEMA can understand -- you are the supercharger that will help keep America's economy moving forward.

I think all of us have spent a good deal of time over the last month and a half reflecting on what it means to be an American.

I know that I've developed a stronger appreciation and greater respect for what it means to live in a free country with opportunities for all.

As our nation re-energizes its economy, it is people like yourselves, working together with companies like GM, that will keep America moving forward.

I will commit to you that GM is dedicated to making it easier for you to work with us now and in the future.

GM Vice President, John Smith will have more to say about that tomorrow.

Now, we need to continue to work harder than ever.

I know you will... and you can count on our support at GM.

Thanks for inviting General Motors to participate in this important conference -- we are proud to be the mark for SEMA this year.

Thank you.