JUST FIVE months into his new job as CEO, Rick Wagoner, 47, has set ambitious 'vision objectives' for General Motors. Wagoner's goals include a 20 percent share of the world automotive market, annual revenue growth of 6 percent to 8 percent and net profit of 5 percent of sales. Currently, GM's world market share is about 15 percent, its revenue growth from 1997 to 1999 was just 2.3 percent, and its net profit margin for 1999 was 3.4 percent.
Elsewhere, Covisint will not provide quick dot-com riches, but that's not why GM got into the purchasing venture, Wagoner said.
Automotive News Europe's Peter Brown and Joe Miller interviewed him on October 20.
For GM, what are the potential benefits of Daewoo, its factories and its dealer networks?
Our initial point of interest has always been that the Korean market is a big market and we don't play in it. Second, Daewoo has developed very nicely over the years. It has capabilities to develop vehicles, and it can help us achieve other strategic objectives around the world.
An example would be [that] we will, over time, need more capability to design and produce product for the Asia region. Daewoo could play a nice role.
What are you going to do to take costs out?
You focus on manufacturing, productivity, improving quality, reducing product development time, making sure you're on top of advertising efficiency, making sure you don't have too many layers [of bureaucracy], and making decisions fast. Those kinds of things aren't really coming at the expense of the product but can improve your business returns. We're constantly looking at how we can get the same or better output with less system costs.
Do you have a hiring freeze on?
I don't have any that I've decreed. In certain business units people are saying they want to slow down hiring. We don't do very well in managing hiring in the industry, certainly in the company. We tend to open the spout wide or close it completely. We need to manage it a little bit.
I think Ron [Zarrella, president of GM North America] is putting a pretty tight squeeze on hiring in the USA, except for new plants and new product programs. And Mike Burns [president of GM Europe] has things screwed down pretty tight in Europe right now. So I basically leave it to them.
Have the expectations of what Covisint (the business-to-business Internet joint venture) will be worth dropped?
I think in the environment we're in, the answer would have to be yes. I would have to say, in fairness, we and our partners didn't enter into it to make a lot of money on an IPO [initial public offering]. If we can do that, hey, that's terrific. But the reason was to improve our base business, our interface with suppliers.
Obviously, the fact that it had a chance to create a lot of market value was interesting. It wasn't the reason we got in the business, and I don't think our competitors did either.
You have set some aggressive goals for the company: 20 percent world market share, 6 to 8 percent annual revenue growth, return on net assets at 15 percent, 5 percent net profit margin.
Those are vision objectives. I call them vision because I don't want to put a time frame on them. This is what we need to think about if we're going to be a top-performing company and the leader in our industry.
We have to convince people we can grow, and this isn't just a mature business. If you think about it, you sell cars in western Europe and the USA, and in every household there are two cars.
Well, if that's your mind-set, it's a mature industry. If your mind-set is you can grow, and China can be as big as the USA in 20 to 30 years, and if you can get there, get a good share of the market, you can get a lot of growth.
If you can convince people that customers would like more services in their vehicles, like OnStar [in-vehicle communications]. That's a lot of growth we never thought about. So we have to get growth and convince people we can sustain that.