General Motors said yesterday that the struggling automaker would re-tool its sales and marketing strategies as part of a plan to make up for a $1.3 billion first quarter loss by its North America business unit.
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| Rick Wagoner |
To save costs, CEO Rick Wagoner announced the automaker would eliminate 25,000 jobs by 2008 by closing plants in the U.S. and Germany. The move will eventually save the company $2.5 billion annually. The plants will be closed to achieve full capacity utilization based on conservative volume planning scenarios of 5 million vehicles built annually.
Yesterday, Wagoner outlined a four-pronged plan at the annual shareholder meeting, saying GM would lessen its emphasis over time on incentives:
* GM will refocus is selling strategy, touting the automaker’s “great value” to consumers. For example, Add-on safety features, including OnStar and Stabilitrak will become standard equipment on all GM cars and trucks.
* The company will better clarify and tailor the role of each of its eight brands to consumers.
*GM will focus its efforts to improve sales performance in the top 25 U.S. markets and enhance sales performance in major metropolitan markets.
* The company will work with dealers to ensure the right products are in the proper locations.
Wagoner did not specify a timeline regarding incentive phase-outs. Automakers like GM and Ford have relied heavily on customer incentives to get potential buyers in their showrooms. Currently, GM is offering the company’s employee discount plan to the public for consumers purchasing a new vehicle (PROMO P&I June 8).
Wagoner cited soaring health-care costs—an expense of $1,500 per eligible employee—as one of the reasons General Motors has suffered financially. High health care costs put GM and other U.S. automakers at a disadvantage when they compete with makers of foreign cars, he said.
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