Nearly a decade ago, Toyota Motor Corp. dethroned General Motors as the world’s largest car company, leaving some GM executives wringing their hands.
Mary Barra wasn’t among them.
When she took the CEO job in early 2014, she inherited a company that for decades was so large and unwieldy executives sometimes didn’t know whether parts of the business were making or losing money.
On a visit to GM’s unprofitable operations in Thailand that year, she signaled a readiness to curb the company’s fixation on size. She criticized her Asia executive team’s five year-plan to introduce several new models, according to people who attended. GM soon announced plans to cut Thailand’s model lineup, rather than add to it.
For years, the mantra in the capital-intensive car business has been that bigger is better. But in nearly seven years running GM, Ms. Barra has found success with an unlikely strategy: shrinking a company that for much of the 20th century was the nation’s biggest corporation by revenue and profit.
Now, Ms. Barra is adamant that GM can still grow but in a different way than in the past: through new businesses built on electric and driverless cars. Those technologies cost billions a year to develop, and are likely a long way from paying off. GM could no longer afford to stay in markets where it doesn’t make money, Ms. Barra, 58, said in an interview.
“We’ve had to make some tough decisions and move away from trying to be everything to everyone, everywhere,” she said.
Under Ms. Barra, GM has exited Europe, Russia and India, places where most rivals compete. In February, the company disclosed plans to leave Thailand for good and pull out of Australia after 89 years.
GM now makes cars or parts in just nine countries, down from 25 before Ms. Barra took over, and employs 164,000 workers today, 25% fewer than before. Her get-smaller approach is especially unusual because it came at a time of prosperity in the car business.
The moves have, until recently, helped GM notch record operating income and profit margins. And the tidier global footprint aided the company through the early days of the Covid-19 pandemic, helping contain the fallout from global factory shutdowns as rival Ford Motor Co. struggled to contain overseas losses.
The super-size argument goes like this: The bigger a car company’s sales globally, the greater its cost advantages, with the ability to command better terms from suppliers, whether on engine parts or ad campaigns.
Mr. Sloan’s aggressive growth strategy spawned more than a dozen brands, hundreds of models and factories in dozens of countries. By the 1940s, almost one of every two cars sold in the U.S. was made by GM.
Soon, GM had grown so dominant that it gained a reputation as a collection of warring fiefs. The heads of its various divisions operated like CEOs unto themselves, and squabbled over capital spending and marketing dollars, say former executives and historians.
Mr. Akerson appointed Ms. Barra to lead GM’s huge product-development operation. She had begun her career as an 18-year-old intern inspecting fender panels at a Pontiac factory in suburban Detroit and spent much of her career in engineering roles inside GM’s factories. Still, Mr. Akerson saw the GM lifer as a change agent impatient with GM’s bureaucracy. As GM’s human-resources chief, she condensed a 10-page dress code down to two words: “Dress appropriately.”
In 2011, in her first week as product chief, she had all the card-key security doors between her office and the engineering staff removed, viewing them as symbolic of how GM tended to work in silos.
As talks advanced, the two executives made a one-day, round-trip visit to GM’s corporate offices in Germany to break the news that GM was selling its European business to a stunned Karl-Thomas Neumann, the division chief who had been trying to engineer a turnaround, people with knowledge of the visit said.
“When you think about the resources that would have been needed to have a full lineup there, with no clear profitability in sight, we had to be real about that,” said GM President Mark Reuss, among Ms. Barra’s most trusted lieutenants.
Late in the summer of 2018, a few hundred of GM’s top executives gathered at a historic brick building in Flint, Mich., GM’s first factory. Ms. Barra dispatched her then-finance chief, Dhivya Suryadevara, to warn that cost cuts would be needed, people who attended the meeting say.
On Thanksgiving weekend that year, GM announced plans to let go more than 8,000 white-collar workers, the cuts hitting the engineering ranks hard. The company also outlined plans to close several North American factories and let go thousands more factory workers, which drew sharp criticism from President Trump.
Ms. Barra in the interview said the changes were strategic and allowed GM to meld its electric-vehicle team with the broader engineering enterprise.
In February, GM said it would end its Australian Holden brand, a once-dominant brand and staple of the country’s car-crazy culture, known for rugged pickup trucks and muscular sedans.
Then, in early March, GM invited hundreds of dealers, analysts and journalists to its suburban Detroit engineering center. Ms. Barra made her biggest statement yet that GM was betting its future on electric cars.
The CEO strolled the floor as visitors ogled a dozen future all-electric models, some several years from seeing the inside of showrooms—a rarity in an industry where future products are cloaked in secrecy. The models ranged from brawny pickup trucks to a Cadillac that one executive said would be priced above $200,000.
GM said it would spend $20 billion developing electric and driverless cars through mid-decade. It is targeting sales of 1 million electric-car sales annually by then. In Ohio, near a factory it closed last year, construction began recently with partner LG Chem on a battery-cell plant bigger than 40 football fields.
In June, Ms. Barra sat with top executives inside GM’s design dome, a circa-1950s auditorium where generations of leaders have reviewed big Cadillac sedans with gaudy tail fins and Corvette sports cars.
This meeting was different: Ms. Barra and her team sat at a large table, wearing masks, to decide which future vehicles were on the chopping block. Details of each model, from minor face-lifts to major new entries, were spread across large digital wall charts, including launch dates and sales targets.
Some were delayed, others scrapped altogether. By the end of the meeting, all of the electric-vehicle projects on the board emerged untouched, along with a nearly $3 billion renovation of a Detroit factory and nearby facility to build them, Ms. Barra said.
“The situation allowed us to look at things with a very clear eye,” she said.