Copyright FOURIN, Inc. 2022
GM Aims to Increase Profits Through Selection and Concentration of Products and Markets
GM strives to increase profits through “selection and concentration” in the areas of products and markets. GM aims to reduce its passenger car lineup, whose sales are sluggish, expand small truck products such as CUVs and pickup trucks, and strengthen development of next-generation technologies such as BEVs and autonomous vehicles. GM will withdraw from Europe and Asian countries and specialize in the United States and China where profitability is expected.
GM has stopped MHEV eAssist and is focusing on improving engine efficiency. GM has two types of cylinder deactivation technology - Active Fuel Management (AFM) and Dynamic Fuel Management (DFM). Dynamic Fuel Management has been adopted by the 2019 Chevrolet Silverado, making it the industry's first mass-production vehicle to use such technology. It is possible to individually control the operation of each cylinder in milliseconds and adjust the necessary torque as a whole. The system improves fuel efficiency by 10-20% compared to conventional engines. In addition, CO2 emissions are reduced by 7-15%. GM has also introduced on-demand Active Thermal Management (ATM) to the 2019 Chevrolet Silverado.
GM is making efforts to reduce vehicle weight by using a lot of steel. In contrast, Ford uses a lot of aluminum for its pickup trucks.
GM’s pickup trucks are mainly made of high-tensile steel. However, there are also new developments such as using the continuous fiber-reinforced thermoplastic composites (CFRTP) for the Sierra Denali 1500 which was released in the summer of 2019.
GM: Recent Achievements / New Models / Technology Development Trends
”Selection and Concentration” Strategy to Maximize Profits
・GM has embarked on a strategy to expand profits through business restructuring announced in May 2017 with a focus on the Americas and China.
– Products: Several passenger car models will be discontinued while more emphasis will be given to CUV, SUV and pickup truck models.
– Markets: GM will withdraw from Europe and Asian countries and specialize in the United States and China where profitability is expected.
♦ About 20 new models are planned to be launched in China from July 2019. Two-thirds of these are SUVs, which are expected to increase profits.
♦ On the other hand, the adverse effects of trade friction between the US and China have emerged as a concern.
・In November 2018, the company announced the revision of its product lineup, production facilities and personnel composition in North America.
– GM aims to reduce its passenger car lineup, whose sales are sluggish, expand small truck products such as CUVs and pickup trucks, and strengthen development of next-generation technologies such as BEVs and autonomous vehicles.
– By the end of 2019, five North American plants and two other plants will be closed. The company plans to reduce the number of employees by about 15% worldwide and improve profitability in the medium to long term.
– In May 2019, the plant in Oshawa, Ontario, Canada, which had announced the end of production in 2019, was renovated and it was revealed that a test course for advanced technologies such as autonomous driving will be installed.
– GM plans to invest 170 million Canadian dollars to convert the Oshawa facility to a stamping and parts manufacturing plant and a driving test site for autonomous vehicles.
Switching Emphasis from Sales Volume to Profit
・GM’s sales for the period January-June 2019 were down 2.6% year-on-year to 70.94 billion US dollars, but operating profit was up 86.0% year-on-year to 3.73 billion US dollars, indicating decreasing sales but increasing profits. Net profit increased 33.5% to 4.55 billion US dollars.
– The increase in profits was the result of strong sales of high-margin models in North America. According to GM, instead of expanding sales, the company has started a strategy to prioritize sales of models with high profit margins.
・In North America, sales decreased 1.1% to 55.69 billion US dollars but EBIT increased 0.3% to 4.92 billion US dollars, indicating decreasing sales but increasing profits.
– Despite planned production adjustments of some products, sales of CUV, SUV and pickup truck models (based on value) were strong. Profits increased due to cost reduction measures through business restructuring.
・In regions other than North America, sales fell 17.8% to 7.90 billion US dollars and EBIT fell to a deficit of 17 million US dollars from a surplus of 330 million US dollars a year ago. Sales declined in China.
– In the second half of 2019, GM expects unit sales to fall below the previous year’s level in the Chinese market. However, in the second half of the year, the company plans to introduce new models, mainly SUV products which are expected to increase sales.