In Need of an Overhaul

Headquartered in Detroit, GM has long needed a change in fortune.Consider this famous fact: GM's share of the U.S. auto market droppedfrom 50 percent in the 1960s to a low of around 27 percent in 2000.Last year was the first year in a long time that GM's market sharerose, however slightly (to 28 percent, according to automotivepublisher Wards Communications). Meanwhile, GM is often hamstrung byits own size, which makes decision making and change slow; by vehicledesigns that critics frequently characterize as uninspired; and byhigh labor costs and other overhead. On top of that, the NorthAmerican auto market, which accounted for roughly $107 billion of GM's$141 billion in revenues last year, is expected to decline by as muchas 10 percent in 2002.

Skeptics say those are the kinds of problems that e-business will notsolve. "The alleged benefits of the digital age fail to address thetwo real problems in the industry: overcapacity and real manufacturingbottlenecks," says Scott Hill, an analyst covering automotive stocksfor Sanford C. Bernstein in New York City. E-business is not the onlyaction GM has taken to revive its fortune. GM's zero percent financingin 2001 and ongoing layoffs to reduce costs are two examples. Thecompany also lured Bob Lutz (who helped Chrysler create buzz cars suchas the Viper and PT Cruiser) out of retirement to refresh GM'sindifferent car designs, and in early 2002 it announced a completerestructuring of the design organization. The other OEMs (originalequipment manufacturers, as the Big Three are known) have problems oftheir own - quality concerns in Ford's case and leftover merger issuesin DaimlerChrysler's.

In the face of these changes, e-business leadership remains acenterpiece of Wagoner's list of strategic priorities. The approach,in GM's catchphrase, is "launch and learn," a philosophy that Wagonerdescribes thus: "Let's get out, take on projects and trials indifferent places around the world, and see what works." A look at thecompany's vast portfolio of e-business projects shows that GM iscommitted to continuing with that approach.

What's on GM's Plate