Two faces of GM: Electric for the city, trucks for the heartland

Mon Jan 9, 2017 4:20pm EST
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By Paul Lienert and Joseph White

DETROIT (Reuters) - General Motors Co Chief Executive Mary Barra says often that the auto industry will change more during the next decade than it has in the past half-century, as she highlights how GM will keep up.

In 2016, it has invested nearly $1 billion to buy a self-driving car technology startup, Cruise Automation; invested $500 million into ride services company Lyft; launched a new car-sharing brand, Maven, and a new electric car, the Chevrolet Bolt.

The automaker is also expanding the array of services available via the high-speed mobile internet connections embedded in millions of GM vehicles.

None of those high-profile moves, however, are likely to have much near-term impact on the No. 1 U.S. automaker’s bottom line.

For now and for years to come, GM will make money the way it did 60 years ago: By selling large vehicles built on steel frames, with V8 engines driving the rear wheels. In 1957, that technology was sold as a Chevy Bel Air. Today, it is packaged as a Chevrolet Silverado pickup truck or a Cadillac Escalade SUV.

The company makes more than 90 percent of its profits, before interest and taxes, in its North American auto operations. The bulk of those profits come from sales of trucks and SUVs, analysts and company executives said.

“That business model has worked and continues to work,” GM President Dan Ammann told Reuters. “We believe that model will keep going, particularly in places where we are strongest, for a long time.”

GM is pursuing a two-pronged strategy, aimed at the increasingly divergent segments of its home market.   Continued...

Mary Barra, CEO and Chairperson of GM, sits with Tony Cervone (R), Senior VP, Global Communications during the presentation of the 2018 Chevrolet Traverse at the North American International Auto Show in Detroit, Michigan, U.S., January 9, 2017.  REUTERS/Rebecca Cook