GM Bullish On America

SANTA BARBARA, Calif., Aug 18 Reuters publihed this story.

"Once upon a time, we set the style," the video says, as black-and-white images of tail-finned Cadillacs and chrome-laden Chevrolets from GM's glory days of the 1950s and 1960s flash by.

"The past is a lonely place to live."

Summing up the renewed confidence at the world's largest automaker, the video, currently being shown to dealers across the country, concludes with "the style is back, the quality is back, the magic is back," as the pictures transition to color and GM's new lineup that it believes will win the hearts of car and truck buyers.

After decades of dowdy styling and falling market share, GM has more reasons to celebrate now than in years. U.S. sales are up 1.8 percent this year in a weaker market, profits are higher and the quality is better.

"We have a mantra now, celebrating on the run," Gary Cowger, head of GM's North American operations, told reporters at a GM conference held here last week, where the automaker previewed its new car lineup due out over the next two years.

"We've got to celebrate on the run. It's like a high five in the NBA while you're running down the court," he said.

Bolstered by its growing truck sales, GM is now readying an assault on the car side of the market, where Korean automakers have gained share at the low-end while the Japanese and Europeans made in-roads in the mid-size and luxury segments.

CARS IN FAST LANE

"There's still a market of eight million passenger cars (in the United States annually), and if we're really going to gain share, we need to focus on passenger cars," said GM Vice Chairman Bob Lutz, the retired former Chrysler executive who GM recruited a year ago to restructure its vehicle development and design system. "It's really a broad-based attack."

Over the past three years, as GM launched a slew of highly profitable large pickup trucks and sport utility vehicles, its share of the U.S. truck market rose to 29.2 percent in 2001 from 27.8 percent in 1999. Over the same time, its share of the U.S. car market has slipped to 26.9 percent from 29.8 percent.

GM gave reporters a rare look last week at 13 new models, 12 of which are cars, including the new mid-sized Pontiac Grand Am, Pontiac Grand Prix, Buick Regal, Chevrolet Malibu and an extended wagon-like new vehicle called the Chevrolet Malibu Max.

Over the next two years, GM will pay particular attention to the heart of the market, the very competitive mid-size segment where Japanese automakers Toyota Motor Corp. <7203.T> and Honda Motor Co. Ltd. <7267.T> have the best-selling cars, thanks to their sterling reputation for quality.

"We are going to attack the mid-size market, and we are going to attack it with a vengeance," said Jim Queen, GM vice president of North American engineering. "I think Pontiac is going to double" in sales, he said.

'GOTTA HAVE' PRODUCTS

But GM's competitors aren't sitting still. Last week, Dieter Zetsche, the head of DaimlerChrysler AG's <DCX.N><DCXGn.DE> Chrysler group said that 14 of the 21 new or refreshed models due in the next few years will be cars.

Earlier this year, GM became the first U.S. automaker to place in the top three, behind Toyota and Honda, in the Harbour Report, an industry benchmark study on quality over the first 90 days of ownership. Now only if American consumers knew.

"The truth is that the quality of our products is better than the perception that many people have of us. So that's a big challenge for us," said Cowger, who until late last year headed GM's manufacturing operations and labor relations. "Perception is a huge consideration."

But before customers even consider GM's improving quality, touted in its new television and print advertisements, executives say the cars have to look good. Over the past few decades, GM has been known for its conservative -- and sometimes awful -- vehicle designs. Under the guidance of Lutz, known in the industry as the ultimate "car guy," GM believes that's about to change with sleeker Pontiacs and Buicks and niche vehicles like the upcoming hot rod Chevrolet SSR pickup truck.

GM will launch 16 new vehicles or model variants this year, and 12 to 14 new products every year for the next five years, Cowger said.

"We have to have every product be 'gotta have,' that you walk up to it and you want to own it," Cowger said. "Our goal is to make every product that we put out a must-have product."