GM Turn-around?

The prospects for the world's biggest carmaker have dramatically improved.

Published: 20-Jan-2007

When Rick Wagoner, the chairman of General Motors, walked onto the floor of Detroit’s Cobo Hall in January 2006, only one question seemed to matter to the assembled throng attending the North American International Auto Show: how soon would the giant American carmaker go bust? A representative of Kirk Kerkorian, an entrepreneur who had just bought a 10% stake, said GM had to wake up or it would run out of cash in three years. Mr Kerkorian has since sold out, but he seems to have galvanised GM. At this year’s show the subject of choice was the firm’s nascent turnaround.

A year ago GM was making record losses, closing plants and slashing its workforce. It was struggling to sell cars at rock-bottom prices and faced having to pay out billions of dollars to prop up Delphi, its former parts unit. Meanwhile, its increasingly rampant Japanese rival, Toyota, was making plans to overtake GM as the world’s biggest carmaker by 2008.

Many of these problems still haunt GM, but even its most vociferous critics can see signs of a revival. The company began this year’s Detroit show with a lavish event attended by Hollywood celebrities. But the real star was the newly redesigned Camaro Convertible, marking a comeback for one of GM’s most famous models. Along with the new Chevrolet Malibu, a complete remake of the type of saloon with which GM once dominated the market, it suggests that the firm is regaining its edge in design. Its new Chevrolet Silverado was named pick-up truck of the year, and when its Saturn Aura was chosen as best car, even the unit’s unflappable general manager, Jill Lajdziak, was lost for words.

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