Analysis: Detroit automakers face test of leadership in 2014

Sun Jan 12, 2014 12:05pm EST
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By Deepa Seetharaman and Ben Klayman

DETROIT (Reuters) - General Motors Co (GM.N: Quote) named a new chief executive, Ford Motor Co (F.N: Quote) kept its old leader and Chrysler Group LLC's CEO averted a divisive public offering. And that was just in the last 30 days.

This year is shaping up as a test of leadership at GM, Ford and Chrysler, five years after the U.S. auto industry's searing restructuring. While the risks ahead are no longer life-threatening, how the companies respond will set their direction for years to come and signal whether the lessons of the financial crisis were embedded deeply enough.

"It's a turn of an era," Xavier Mosquet, senior partner and managing director at Boston Consulting Group, said in an interview. "Frankly, it is a totally different, new type of competitive situation that is emerging."

Analysts see 2014 as a transition year, with slowing growth in the U.S. auto market and companies facing a renewed mandate to gain ground overseas. The 2015 contract talks with the United Auto Workers union also loom in the background.

In the weeks leading up to this year's Detroit auto show, GM, Ford and Chrysler have all taken steps that highlight the leaders who will help them face what Mosquet described as the most competitive North American market in decades.

GM vaulted its product development chief, Mary Barra, to the top spot last month. Ford CEO Alan Mulally ended months of speculation by saying last week that he would not leave to run Microsoft Corp (MSFT.O: Quote) . And on New Year's Day, Sergio Marchionne struck a long-sought deal allowing him to merge Chrysler and Italy's Fiat, the two automakers he has led since 2009.

These moves signal that GM, Ford and Chrysler will maintain the strategies that have allowed them to emerge from the crisis with stronger balance sheets and more attractive vehicles.

But their leaders will need to be more flexible. Analysts note that the skills needed in a turnaround differ from those needed during growth years, when a wrong bet can undercut a company's future.   Continued...

A Ford logo is seen on a car during a press preview at the 2013 New York International Auto Show in New York, March 28, 2013. REUTERS/Mike Segar