GM's Board Ratchets Up Pressure on New CEO

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Product Plan Could Hurt Market Share

GM's new product plan will replace 45% of its sales volume with new models between now and 2013, according to a report authored by Banc of America Securities-Merrill Lynch (BAC) analyst John Murphy, although it is unclear at this point how many new models will be introduced.

That's below the industry average and well behind the Korean automakers as well as Ford (F), Toyota (TM), and Honda (HMC). Unless GM comes up with some more new models, the thinner pipeline could knock GM's market share to 15% or 16% in the next few years, Murphy's report said.

The day after the board meeting, on Aug. 4, Whitacre told reporters in a conference call that the board adjusted GM's plan and pulled some new models ahead, though he declined to give specifics. He also said GM would try to retain and grow market share.

Plenty of GM executives have made that brazen call before. But GM executives say Whitacre's comments don't mean that the company will resort to tired old plays such as using deep discounts and cheap sales of profitless cars to rental fleets to boost share. Whitacre and the board want to see a comprehensive strategy to win in the market while building pricing and profits.

Lutz Pushing Design

A lot of that responsibility will fall on Vice-Chairman Robert A. "Bob" Lutz, the 77-year-old executive who rescinded his retirement plan and came back to oversee GM's design, marketing, and communications efforts. Says Lutz: "This is a highly capable and intellectually curious board."

Lutz will be in charge of pushing chief designer Ed Welburn to come up with designs that lure buyers and craft a brand image for GM's cars. Then he will have to communicate to buyers who have ignored GM that Buick, Cadillac, Chevrolet, and GMC are worth looking at. "That falls on my area," Lutz says. "I accept it."

While there are five carryover members from the old board, the new directors are expected to be tougher. Some, like Whitacre, former Coca-Cola (KO) Chairman Neville Isdell, and retired Burlington Northern Santa Fe (BNI) Chairman Robert D. Krebs, ran large companies with great success. Isdell in particular may have some good marketing advice, since Coke is considered one of the best brands in the world.

Lutz has already started working up buzz for GM. The company generated big headlines with news that its Chevy Volt, which uses an electric motor and gasoline engine, will get 230 miles per gallon in the city. GM is also off to a great start with its Chevy Camaro muscle car. The company plans to aggressively market the new Chevy Equinox and Cadillac SRX crossover sport-utility vehicles and the Buick LaCrosse sedan. Lutz has started reviewing GM's advertising already.

Ultimately, he and Henderson will have to find a way to overcome the perception that GM is a troubled company with poor products. But Henderson is never one to show that he feels pressure, even from a new board. "It was a refreshing discussion, actually," Henderson said. "Coming out of bankruptcy, they want to know how we will win." Treasury officials have said the job is Henderson's to lose and he has every chance to turn the company around. What he doesn't have is unlimited time.

Welch is BusinessWeek's Detroit bureau chief.