With little time to waste, CEO Ed Whitacre accelerates changes at GM

In fashioning a new way forward for General Motors, Chairman and interim CEO Ed Whitacre has a formidable task ahead of him. In addition to finding new leadership to help reverse GM's decades-long slide, Whitacre must focus on getting new products to market, repairing the venerable automaker's image with skeptical consumers and improving relationships with dealers angered over the recent shuttering of hundreds of showrooms across the country.

But if there is one thing Whitacre "gets," it's something that his predecessor, Frederick "Fritz" Henderson, who suddenly resigned last week, seemingly didn't -- that Detroit-based GM needs to accelerate its turnaround. Just within the few last days, Whitacre has named new management in key posts and has narrowed his search for a new chief financial officer, which he hopes to name within the next few weeks.
When it comes to finding Whitacre's own replacement, however, the choices are less clear and will likely take longer than few weeks or even months. Unlike the technology industry, where superstars abound, the mature auto industry sports few obvious choices.

GM's own pipeline of talent isn't likely to produce the kind of leader the automaker needs, given the company's moribund structure, says James Bell, executive market analyst at Kelley Blue Book, a publisher of pricing information.

GM Vice Chairman Robert Lutz, who joined GM in 2001 and has helped lead of revival of design at the Detroit-based company, was thought to be an obvious choice by some. But Lutz, 77, is no spring chicken, and can't be counted on for GM's long-term future. Further, Whitacre's recent management shakeup signals Lutz's days with GM may be numbered, with speculation that he may retire early next year.

Still, Bell hopes that Lutz's commitment to design has rubbed off on young GM up-and-comers, adding that the former Chrysler Corp. president's instincts have borne out. Just a few short years after he joined GM, the automaker started turning out better products -- and most importantly ones that consumers want.

A case-in-point is the new Chevrolet Camaro, which is driving consumers into dealers showrooms and doing so without the aid of expensive incentives or special financing. The introduction of the muscle car has also reignited a decades-old rivalry with Ford Motor (F) and its Mustang sports car -- albeit one over fuel efficiency not just raw power.

GM's revival and survival rests solely on its ability to turn out cars the American driving public wants, Bell says. The automaker needs to produce vehicles that are reliable, attractive, fun to drive and widely available. That last point shouldn't be a problem for GM. Despite having reduced the number of dealers nationwide, the company still has the largest dealer network in the country.

But even that relationship has to change. Given GM's financial circumstances it will no longer be able to offer dealers deep discounts, financing programs, co-op advertising and other types of "back-end" money, Bell says.

GM needs to convince dealers that its product pipeline will whip up excitement and bring customers into showrooms. And GM will be eying which dealers have the financial wherewithal to stick around while the automaker gets its plans in high gear.

Bell says a meeting next week in Detroit will help both the automaker and dealers assess their relationships. "There is no magic bullet in this business," he says. "It's going to have to come back to cars again."
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