DETROIT - Mark Reuss is using his own money to lease a Chevrolet Volt for $300 a month (all figures in U.S. dollars). What?
Yes, this is shocking for two reasons: first, as head of General Motors' North American operations -- including Canada -- you would think he'd be able to drive Chevy's electric car any time he gets the urge, and for free; and two, GM sold 326 Volts in December, when it started shipping them. Volts are in short supply. I guess being a big GM boss does have its privileges -- you go to the head of the Volt line..
"It costs me a $1.50 a day to run the car," says the gruff-looking Reuss, whose father was once a president of GM. "I'm a buyer; I bought it for my kids to drive. They wanted it."
GM, of course, would like tens of thousands of buyers to get charged up about the Volt, which by the way goes on sale in Canada late this year. GM believes the Volt is a rolling symbol for GM's technological expertise, of its apparently new-found capacity to finish what it starts, and the company's ability to deliver on a promise. Believe me, after 25 years of covering GM and the rest of the auto industry, finding a GM that actually does what it says is BIG news.
The Volt ($41,000 in the U.S.) has been subject to a small burst of controversy by nit-pickers who insist it's really a hybrid because in rare circumstances the on-board gasoline engine might drive the wheels. But really, that's just silly.
The Volt is an electric car capable of going 40-80 km on a fully charged battery before turning on a gasoline engine generator to charge the 180-kg battery pack. It's an electric car with an on-board gasoline generator -- a so-called "range-extender" intended to abolish range anxiety, or the fear EV owners have of their cars running out of juice in the middle of nowhere.
"I live in Washington, DC," said GM CEO Dan Akerson to reporters at the North American International Auto Show here in Detroit. "If you want to drive to Richmond, Virginia, which is 140 miles away (224 km), or Philadelphia, today's battery technology is not able to do that and I don't think Americans will put up with that." Thus, the range-extending gas generator.
Reuss, meanwhile, is quick to point out that the Volt is not a car for everyone.
"We're not betting the farm on this," he says during an extended interview here at the show. "If you don't want to buy it, don't buy it. We have a suite of (environmentally-driven) technologies."
Most important of them are the small, fuel-efficient cars GM has begun launching with the arrival of the Cruze compact car late last year. The Cruze replaced the utterly forgettable and painfully bland Chevy Cobalt in GM's lineup, just as the Sonic will later this year replace the very sad and cheap Aveo later this year. The 2012 Sonic was unveiled this week at Detroit's show and will be available as a four-door sedan and a five-door hatchback.
The startling news here is that GM - finally, finally!!! - is ploughing resources into small, miserly little city cars. Not ugly, junky ones, either, but nice looking runabouts with plenty of features.
The Sonic, for instance, looks very promising. Even more so, Buick announced here that it will introduce this year a compact car called the Verano. The latter shares the basic mechanical architecture of the Cruze, but is far better equipped, much quieter and looks pretty sexy, argue GM officials from Reuss on down.
Something else startling emerged from the Verano announcement, too: GM is putting some serious resources into building Buicks that Canadians and Americans under the age of 100 just might want to buy - cars, that is. The Verano is aimed at 20- and 30-somethings with some dough who might otherwise have bought a loaded Volkswagen Jetta - the old one, not the downmarket new one -- or a stripped down BMW 3-Series. Unbelievable. Someone, anyone, under 40 being chased to buy a Buick? Knock me over with a feather.
If it's not already obvious, GM, argues Reuss, is now on the offensive. The old GM, he says, "was killed," and that means a new, leaner GM has emerged from the 2009 bankruptcy. True enough, Canadian taxpayers still own about 9.3 per cent of GM (and about 2.3 per cent of Chrysler) but that's less than before. GM launched a successful initial public offering (IPO) late last year and Canadian governments sold off millions of shares.
Canadian Industry Minister Tony Clement told reporters here at the show that our government will be "prudent" in the sale of its remaining GM and Chrysler shares, though. Clement said the government will "certainly" sell shares in the two companies, though when remains a mystery. We do know that in November the government said it had sold about 30.5 million of the GM shares it acquired when the company went bankrupt in 2009.
Reuss, for his part, is happy not to talk about bankruptcies and restructuring any longer. An engineer by training and temperament - he at one time ran GM's high-performance division - Reuss is one of those rare things at GM: a "car guy" in a senior leadership role. Indeed, the new CEO Akerson is essentially a corporate restructuring expert with absolutely no experience in the auto industry.
Thus, even though GM has reduced the number of North American brands it has to four -- Chevrolet, Buick, Cadillac and GMC -- from eight in its 2009 pre-bankruptcy days, the real work of putting GM back together is in the hands of top managers like Reuss. He understand the complexities of the car business and the difficulties associated with making cars and light trucks people will buy without being bribed by the sort of rich discounts that helped drive GM into bankruptcy.
To help hold the line on sales sweeteners and other giveaways, Reuss says GM is being disciplined about not over-producing anything and is zeroing in on reinventing its product lineup. From top to bottom, GM vehicles must sell on their merits.
"We've cut down our inventories so we really are making cars to demand which is a really powerful message," he said. "We were a structural cost-driven company; now we're a company in the pursuit of revenue and customer satisfaction." In other words, GM is no longer completely dominated by accountants who first and foremost want to cut costs. Another stunning development.
"We are about the destruction of mediocrity and the pursuit of excellence," says Reuss.
Brave and bold words, but where's the proof?
Chris Perry, vice president of Chevrolet marketing, told reporters to take the Sonic as an example of what the "new" GM is about. The Sonic, he said at the show, "blends the practicality of a small car with the passion for driving that Chevrolet vehicles like the Corvette are known for. It's a combination of great design, fun driving experience and the latest connectivity features in a serious competitor with a fun spirit."
Still, even CEO Akerson admits that GM is about a year behind schedule in new car and truck introductions versus the competition. Speaking at this week's Automotive New World Congress in conjunction with the auto show, Akerson said GM slashed development spending while in bankruptcy.
"The facts are, with the bankruptcy, we've lost roughly a year in terms of development," Akerson said. "That's why '12 and '13 are more pivotal for us in the United States," he added, referring to 2012 and 2013.
Akerson said GM will spend $7 billion on product research and development this year, compared to $5 billion in 2009. Reuss said much of the money is being spent on reinventing the entire Chevrolet lineup, from pickups to compacts such as the upcoming Orlando minivan/crossover which is based on the Cruze platform. GM also plans to expand its lineup of electrified vehicles, with an eye to having an electric vehicle of some sort - hybrid, plug-in or eAssist-equipped -- in the lineup of each of its four brands. The eAssist technology uses an electric motor to help increase fuel efficiency.
Still, even as Akerson was announcing GM will increase Volt production to 25,000 from 10,000 this year, he also admitted the car won't be profitable for at least three years. Thus, just about everything else in GM's lineup better make money.
That's where Reuss and his ilk come in. No, his $300 a month Volt payment won't make or break GM. But the product decisions gearheads like Reuss are making will determine the fate of the company.
As I walked the floor of the Detroit show it was pretty clear to me that none of GM's competitors are standing still. I believe GM's fate will be written in the next 18 months, at the outside. By then, GM better have a roster of solid and profitable hits in showrooms. If not, it will be back to the 2009 bankruptcy scenario for Reuss, Akerson and tens of thousands of GM workers.
