Questions for General Motors' Troy Clarke
August 29, 2008
Is the current downturn cyclical or are fundamentals changing so that the market will never return to normal?
We think there are cyclical elements of it and some structural elements of it, and we think there are more structural elements than cyclical elements at this particular point in time. When I say that, though, I'm talking about a market that should be running in the 14-million unit range, not a market that's running in the 12.7-million unit range... We think that is still somewhat of an anomaly...We think the market should be running probably just a little north of 14 million units."
Is the market leveling off?
The market does have growth potential...We've optimistically said stability will probably come in the fourth quarter, and we'd begin to see evidence of that, but I don't know that that's the case. I think there are a lot of experts now who suggest it may not be until the second quarter of next year...That's assuming there's not another crisis, that gasoline doesn't go up another $2 a gallon or there's a global crisis that causes fuel price anxiety...You'd hate to plop down your money on a Suburban only to find that gas prices double again."
Has the market hit bottom yet?
We think so.
What's been the result of the Employee Discount Program General Motors launched on Aug. 20?
We've seen large sales rate increases on full-size trucks and utilities...The market feels artificially below what would be the normal demand, so it's very interesting for us with this employee discount plan. We have seen a response, though, accurately, not like the response in 2005 (with our previous employee discount plan). But we're encouraged by what we do see.
It expires Sept. 2. Will you continue it?
It will be interesting to see what level of buying we see after the employee pricing program ends. That will tell us something about whether the market is starting to support itself or if it will need more stimulation.
Where is the full-size truck market headed?
It feels like this is the early 1980s. It's not going to be 40 percent trucks; it's going to be 30, maybe even 25. Cars are going to be a much bigger player.
Are SUV buyers downsizing to crossovers?
Our data indicates people are not falling into crossovers [as they downsize from traditional truck-based SUVs]. They're falling into cars. Crossover buyers are moving up from cars.
Will GM ever recover the investment dollars it is making in the Chevrolet Volt?
Yeah, I think we will. (maybe not in the first generation)
What does your research show you about the Volt as a recognizable name?
We have data (that shows) it's not the most recognized in GM's portfolio, but it's the most valuable brand that we have...At an awareness level, the Volt obviously has consideration intent (80,000 leads on GM's Web site)...Everybody who's heard of the Volt can give you a description of what they think it is...The fact that it's a brand that has yet to be supported by a vehicle, it's wholly possible that you have a different interpretation of what a Volt is or what the Volt brand promises than we do. And so part of the role of our market research is to understand that, so that we make sure that as we execute the vehicle on something other than just its technical basis so that we can build on the brand that the concept has already created.
What is going on with leasing at GM?
We've been walking down lease penetration on a pretty steady basis, both here and in Canada. We've intentionally brought our leasing down to about 10 percent as of the end of July. And that's exactly where we want it to be. We recognize there are some number of customers who may or may not consider us because we don't have a leasing deal available, but we're watching that, managing that...So this month, the revisions that we've most recently made, leases will come in under 5 percent, and we'll look at the data the effect that may or may not have had on the number of sales we made... The answer isn't zero leasing, by the way. The answer is some level of leasing, but there's a subvention, a cost of leasing, that makes it an expensive form of incentive that we probably should be applying in certain segments and judiciously applied in others. The two bastions of leasing are premium vehicles, where people like getting a new car every three years, and leases on midsize cars where it's an affordability issue.
Now that Ford is introducing the Fiesta in the U.S., can GM make the case to bring
the Opel Corsa to the U.S. to complement the just-announced Chevrolet Cruze?
Right now we don't have any plans. The current Corsa is not federalized and it would be prohibitively expensive to make it able to be sold in the U.S. In the following generation, the Corsa and Aveo will share the same corporate architecture ... in the early part of the next decade. They'll be the B-Class platform.
Do you think that consumers need to understand gas prices and fuel consumption a little bit better?
A lot of stuff that we look at says there is a significant cost of ownership element. Fuel economy factors into cost of ownership... Maybe that's where we need to shift the dialogue with the consumer and be more direct about discussing cost of ownership.
As GM cuts cost, what's its future in NASCAR?
We wouldn't consider pulling out of NASCAR...All expenditures, including motorsports, have to have the right cost/benefit ratio, though.
Troy A. Clarke has been president of GM North America and GM group vice president since July 1, 2006. He previously was president of GM Asia Pacific and GM group vice president from June 2004. He earlier was GM group vice president of manufacturing and labor relations and vice president of labor relations. He joined GM as a coop student at Pontiac in 1973. Clarke was interviewed by the editorial staff of Edmunds.com at its Santa Monica, Calif., headquarters Aug. 28.
Photos by GM
1 - Troy A. Clarke
2 - Chevrolet Volt
3 - Chevrolet Cruze
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