General Motors to Focus on New Products, Education As Part of Strategy to Fix Ailing Unit

NEW YORK March 23, 2005; John Porretto writing for the AP reported that General Motors Corp. plans to focus on new products and educating potential buyers about the unique aspects of its car and trucks as part of a multifaceted strategy for fixing its ailing North American business, the head of GM North America said Wednesday.

Gary Cowger acknowledged the extremely difficult start to the year for the world's biggest automaker, saying it was hurt by strong business at the end of 2004, rising interest rates and competition.

Cowger said while GM's financial outlook may have changed when it slashed its first-quarter and full-year earnings outlooks last week, the company's managers are "extremely focused on what we need to do."

That includes spending incentive dollars more strategically, reallocating resources for vehicles with greater potential for high-volume sales and improving marketing, Cowger said at the opening of the two-day media preview at the New York International Auto Show.

In particular, he said GM needs to do a better job of conveying to customers the unique aspects of its cars and trucks.

He cited the company's announcement in January that it plans to put two safety features -- OnStar in-vehicle communications service and electronic stability control -- in all of its vehicles by the end of 2010. GM believes it would be the first automaker to make both features standard across its entire fleet.

"We want to make sure that people are aware of the things that only GM can do," Cowger said.

GM, which has been struggling because of sluggish North American sales and high costs for health care and materials, lowered its 2005 earnings forecast last week to $1 to $2 a share from a previous estimate of $4 to $5 a share.

At that point, Standard & Poor's revised its ratings outlook for GM to negative from stable. S&P's decision could foreshadow a downgrade of its rating on GM debt to junk status, which would significantly increase GM's borrowing costs. Fitch Ratings also downgraded GM's ratings to one notch above junk.