By most accounts, General Motors is on a roll. U.S. small car sales were up a phenomenal 229 percent during the second quarter of 2013 versus the same period last year, with sales of Chevrolet cars and Cadillacs up 31 percent and 34 percent, respectively.
But according to Mark Reuss, president of General Motors North America, "there's no fist bumps and high fives" when it comes to California.
We caught up with Reuss to talk about GM's post-bankruptcy evolution and its plans to regain sales in the state.
Q. What happened to GM in California?
A. We were at one time very strong here, and over many decades we lost that market. We became a Midwest truck company. We had a really good dealer network at one time here, too. It was in the right places with the right demographics with the right products. Over a long period of time, we didn't offer the right products for the changing demographic, and our dealer network was no longer in the right locations with some of the right operators.
Q. How is GM fixing its products to better accommodate California customers?
A. It's been four years since the bankruptcy. In three years, we've been working on the dealership piece of it, getting the right facility appearance and changing the way we operate to be customer-centric again. The product piece you can see coming. California is a big truck market, and it's also a big alternative fuel and propulsion market.
Q. California accounts for 11 percent of U.S. passenger vehicle sales, so it's an important market for all manufacturers. Why is it crucial for GM?
A. It's important because this is a huge market. It also sets opinion across the country and perhaps even outside the country for what is good and relevant and desirable for automobiles. That's really important.
Q. California is also the No. 1 market for alternative fuel vehicles. How is the Volt doing for you here?
A. About 60 to 70 percent of Volts are sold right here in California. We'll sell 3,300 this month. As we take costs out of the car and lower the price, people accept it more. It's just hard to explain how it operates. We get lumped in with Leafs and everything else, and those are pure electrics with range anxiety.
Q. There are two theories about customers' embrace of alternative fuel vehicles. One is that green is becoming more mainstream and is here to stay. The other is that consumers lose their enthusiasm for "green" as the economy improves. Where does GM stand?
A. Unlike what we were before, which was a structural cost-reduction entity, we're now a revenue-generating entity. And if you're going to generate revenue, you have to be a company that has a portfolio that satisfies lots of different people and to be able to carry that on a relatively steady state through the ups and downs of taste changes, but there are permanent trends we need to be a part of. People's behaviors and attitudes shift. Sustainability, we have to be a part of it, and be a company that does it better than anybody else and offers the consumer more value around sustainability than anybody else. We're doing that with the Spark battery electric vehicle, to the Cruze diesel, to the Malibu with start-stop, to the Impala with E Assist, to the Volt. There's not one magical technology that will solve all of that, but if we can cut greenhouse gases and get better fuel economy and provide people with really beautiful vehicles that are functional that help them reduce the complexity of their daily lives, then we have a really good business model for a really long time. The other stuff is short-term ups and downs. We can handle that.
Q. GM has signed a lot of partnership agreements with competitors over the past few months, including deals with Nissan to co-produce a compact cargo van, with Ford to jointly develop advanced transmissions and with Honda for fuel cells. What does GM get out of collaborating with other manufacturers?
A. We have fuel cell leadership in terms of our technology and how it works in a car. We've spent resources to do that over the last 10 years. To commercialize that fuel cell, we're working with another company and looking at the infrastructure piece of it. The more people that are interested in pushing that, the better traction you get, instead of one company saying you need to put a hydrogen fueling station over there. If you can get costs taken out and collaborate, it's good because you can bring to bear different schools of thought, which is really positive and creative.
Q. Do you see a future for fuel cell cars?
A. I really don't know. We can put fuel cells in cars today. The question is: Are they going to be something that people want to buy? Can they use them? Can they fuel them? That's a whole different set of questions. Collaborations will help advance that thought. There's huge merit in it, and I like it personally because hydrogen is a byproduct of some of the big refinery activity, but there's a lot of problems in our cities and infrastructures that will get more focus.
Q. How about clean diesel? You're the first American manufacturer to bring that technology back for a modern passenger sedan with the Cruze.
A. We've sold close to 1,000 over the last month and a half, which is more than I thought we'd sell. We're capacity constrained, so I have to spend a little more money to get more capacity if it takes off. I love the car. I love diesels. There's huge potential from an engineering standpoint because it's so efficient combustion wise. If I had R&D dollars to spend, I'd spend it on clever, less costly solutions to fix the NOX emissions piece of it. But the fundamental efficiency is good, and it's fun to drive and it's different, too, which people like.
Q. Will we be seeing more diesel passenger vehicles from GM in the U.S.?
A. We've got a whole portfolio of diesel engines globally, so this is one of them. I would like to see a few more things happen, but we're going to do it based on the success of what we do instead of declaring that it's going to be great. I'd rather have proven success on the Cruze.
Q. What about natural gas? The mass transit industry has already adopted it. Will GM enter that space with a CNG passenger vehicle?
A. There's a huge future for CNG, more than hydrogen, in the near future. Almost all of our engines are capable of running CNG. It's the fuel delivery that needs work to engineer and implement.
Q. Care to share a timeline for GM's potential entry into the space?
A. We already have trucks and vans on a commercial basis. We're seeing how that goes, but I'd like to be in the retail space sooner rather than later.
Q. Will there ever be a time when GM makes passenger vehicles that have two or three wheels instead of four?
A. If you go to Paris, you see electric bikes and regular bikes as a mass transportation solution which is a great relief for traffic, so that model is already starting to take place. But at the end of the day, cities in the U.S. aren't going to spend a bunch of money to change the road structure.
Q. How will GM evolve to address increased urbanization globally and the traffic congestion that inevitably results?
A. We've shown a couple different things. The EN-V concept is more personal mobile urban transportation. Those ideas aren't for every place, but we will pilot it in Shanghai, China, and see where it goes and learn a lot from doing that. Is it the only solution? No. I think a transportation company in the future, like GM, if it's really a transportation company and not just a car company, should be providing solutions to lots of different people in different forms -- everything from two-wheeled to four-wheeled. Whatever is desired, we should be able to have a solution.
Q. How does Cadillac's comeback fit together with California?
A. First of all, Cadillac has not come back in California. It's in progress, but there's no fist bumps and high fives here at all. It's really important that we do, though. Again, this is an opinion-setting part of the country. It's something that people can be proud of if we do it right. Cadillac is an American luxury brand, and part of its comeback is about what America could be again. We've got to quit trying to copy other people and make it unapologetically American but new American, which is out-engineering, out-valuing and out-styling the competition.
Q. When will GM's new vision for itself truly click?
A. Over the next five years, the portfolio will take hold. Will we be No. 1 in five years? No. That's ridiculous. This didn't happen over five years.
Q. Why aren't people buying in to GM in a bigger way in California?
A. We earned certain reputations on quality and desirability -- styling-wise -- that led to our decline, and we went bankrupt doing it. We were a structural cost-reduction entity, and when you do that, you take things out of the car that customers want, and the value of the brand gets destroyed along the way. So we're building that back. I'm not smart enough to know exactly when that will happen, but I know we're doing the right things.
