Barra: GM Finding Ways to Trim the Fat Following Virus Shutdown

The next few weeks will be very important, said GM CEO Mary Barra, during a virtual fireside chat with Credit Suisse, Tuesday. With a possible second-wave of COVID-19, the question of how GM can protect itself from more interruptions is top of mind.

Despite ending the first quarter with $33.4 billion in automotive liquidity, GM is being careful to keep costs as low as possible in the future.

“GM will come out of this with a lower cost system overall based on what we’ve learned and found ways to trim costs,” said Barra.

That will include steps like winnowing down the number of trim levels on vehicles to stop making vehicles that have to be heavily discounted. The Colorado/Canyon, for example, had their lowest trim levels eliminated recently, raising the base price, but reducing the number of low-volume trims.

“[The pandemic] really causes you to look at every single thing you’re doing and look at every line item,” said Barra. “We have found things we don’t need to do and found things we can do more efficiently.”

One thing GM has found to do more efficiently is sell. Its Shop, Click, and Drive website will be getting more attention soon, as GM believes it to be a more efficient way to match customers with vehicles and dealers.

When the pandemic hit, GM also suspended stock buybacks and quarterly dividends, which accounted for $2 billion in savings. Along with the $16 billion it took from its line of credit, all of which should place GM well to survive the coming weeks. Building more inventory will be essential, though, and Barra said that trucks are the priority. With two major shutdowns in the last 12 months, GM is running low on inventory.

The good news for now is that Barra did not mention any job cuts.

[via]

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