GM Names Surprise Choice as New CEO: First Female at a Major Automaker
As of Monday night, U.S. taxpayers are no longer shareholders in General Motors Corp. (NYSE: GM). So the company’s decision to announce Tuesday morning that Mary Barra will become the new chief executive, replacing Dan Akerson, appears to be deliberate, not coincidental. There had been speculation that Akerson might leave before his contract expired in 2015, but this announcement was earlier than anyone expected.
Akerson was named CEO in 2009 and steered the company through its bankruptcy, reorganization, federal bailout and, eventually, repayment of the government funding that GM received. It could truly be said that his work at GM was finished.
Mark Reuss, who is president of GM’s North American division (the company’s largest) was widely viewed as the most likely candidate to replace Akerson. He has headed the North American group for four years and often filled in for Akerson at public appearances. Other top GM executives who were contenders include CFO Daniel Ammann and vice-chairman Stephen Girsky.
Barra has been head of GM product development for nearly three years and has held a variety of senior executive posts in her 30+ year career at the company. She was charged with slashing the company’s costs and rationalizing the 30 different designs the company uses to a more manageable number.
It seems reasonable to believe that she played a significant part in reaching the recent decision to quit selling the Chevrolet brand in Europe in favor of the company’s lackluster Opel and Vauxhall brands.
When GM made the announcement regarding Chevy, the company’s vice-chairman said that Opel is “gaining momentum” whereas Chevy’s sales were going nowhere. GM estimates that the turnaround in Opel and Vauxhall sales will return to profitability by mid-decade. The decision could cost GM up to $1 billion in restructuring charges.
Opel has cost the company around $16 billion in losses over the past dozen years, and why GM has stuck with the brand for all this time is really down to two points: nobody else will buy it and closing it down would have been impossible given European restrictions on firing all those workers.
Barra begins her tenure as CEO with the Opel millstone around her neck. If it ends up eventually dragging her down, she will not be able to point the finger at someone else’s decision.
GM shares were trading about flat Tuesday morning, but that is most likely due to the end of the government’s shareholding more than to the naming of Barra. The stock was up 0.1%, at $40.91 in a 52-week range of $24.40 to $41.17.