GM Stock: The Rise of General Motors CEO Mary Barra
General Motors is not the company it used to be, and the greatest credit for this transformation goes to CEO Mary Barra. Mary, who has been at the helm of GM since 2014, is the first woman to run a major automaker.
Hers is the story of a leader who took a struggling company whose formula was no longer working, and gave it a fresh lease on life.
The Financial Crisis: How the Giant Almost Fell
During the Great Recession, the automotive industry went through a crisis from 2008 to 2010. Though it affected European and Asian automobile manufacturers too, it was the American industry that bore the brunt of it.
In May of 2009, General Motors announced that it was shutting down over 2,600 of its retail outlets, a measure that was meant to help keep the company out of bankruptcy court. One month later, on June 1st, GM filed for bankruptcy.
The Best Management Team GM has Ever Had
A decade has passed since the financial crisis. The management team that GM has put together is believed to be one of the best the company has ever had.
Their impressive top management team consists of CEO Mary Barra, President Dan Amman, Executive VP Mark Reuss, and CFO Dhivya Suryadevara.
With Barra’s leadership, the team has engineered an impressive turnaround, with GM making billions in profits and making forays into Tesla territory with the Chevloret Bolt EV, an affordable, all-electric car. The company plans to launch 20 new electrified cars by the year 2023.
While the old GM, before the crisis, was embroiled in internal conflicts and competition, Barra’s GM is a model of cooperation. Words like “empathic precision” have been used to describe her. The current team transmutes conflict into productive collaboration.
Whipping GM Back into Shape
Since she took over the company in 2014, Mary Barra has excised unprofitable divisions, put the company’s focus on quality metrics like return on invested capital, and generally endeavored to prepare General Motors for a future that is post-oil and dominated by robo-taxis.
Over the next five years, GM will roll out 20 new electric vehicles. In 2016, the company bought Cruise Automation, a self-driving car unit, for $581 million. After investments by Honda and SoftBank, the unit now has a valuation of $14.6 billion.
Just as indicative of General Motors’ forward-looking attitude under Mary Barra is the company’s new venture Maven, GM’s experiment in peer-to-peer car-sharing. GM has also invested $500 million in Lyft, the ride-hail company, an investment that is likely to be richly fruitful during Lyft’s IPO next year.
The Tragic Story of GM Stock
In spite of the good work put in by Mary Barra and her team, GM’s stock is underperforming, especially when you compare its $32.65 share price to Tesla’s $330.90.
Though GM has put in several measures to adapt to changes in the automotive industry, the company is still heavily dependent on traditional pickups and SUVS. Out of the 2.2 million vehicle sales it has made in the US so far this year, 80% have been light trucks and crossovers.
These trucks are highly profitable, and from 2014, when Mary Barra took the helm, up to 2018’s first half, General Motors has made a cumulative profit of $21.5 billion. It is this good performance that has enabled the automaker’s expensive investments in autonomous technology and vehicle electrification.