GM's 2025 platform plan: Simplify and seek to save billions

Thu Oct 2, 2014 5:59pm EDT
 
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By Ben Klayman and Paul Lienert

DETROIT (Reuters) - It could be a defining element of Chief Executive Mary Barra's legacy at General Motors Co (GM.N: Quote): A drastic shift over the next 10 years from 26 global vehicle production platforms to just four by 2025, a bold stroke that could eventually save the U.S. automaker many billions of dollars in production costs.

The radical streamlining of GM's basic architectures, announced on Wednesday at a day-long investor briefing near Detroit, is intended to simplify the engineering and manufacturing of GM's future cars and trucks, while enabling the company to deliver better-differentiated designs more quickly to customers around the world.

If it succeeds, then GM will be able to save on components, tooling and other manufacturing-related expenses.

However, to get there GM faces a challenge of enormous complexity that many of its global competitors, notably Volkswagen AG (VOWG_p.DE: Quote) and Toyota Motor Corp (7203.T: Quote), already have begun and are still sorting out. The up-front cost is also staggering.

Such a massive overhaul of the development and production processes is "incredibly disruptive, expensive and painful," said Morgan Stanley auto analyst Adam Jonas, and requires "a well-oiled machine, culturally, managerially and financially."

BASIC BUILDING BLOCKS

In fact, Barra, 52, began the process when she headed GM's global product development organization before succeeding Dan Akerson as CEO in January.   Continued...

 
The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August 25, 2009.    REUTERS/Jeff Kowalsky/Files