GM Barra Faces Shareholder: As Mary Barra approaches her 10th anniversary as the CEO of General Motors (GM), she finds herself at a pivotal juncture, overseeing a comprehensive overhaul of the automaker. Despite her ambitious strategies, such as divesting money-losing ventures in Europe and aiming to outshine Tesla in the electric vehicle (EV) market, GM’s stock performance has been lackluster. Since its peak in November 2021, General Motors shares have declined by 47%, prompting Warren Buffett’s Berkshire Hathaway to sell its entire GM holdings during the third quarter.
Barra’s leadership has been marked by a series of transformative decisions, including exiting unprofitable ventures and betting big on developing a lucrative robotaxi business. Yet, the market has not responded favorably, and the share price remains close to the level at which GM went public in 2010 following its government-financed bankruptcy.
Recognizing the challenges, Barra is once again reshaping GM’s strategy. Recent announcements indicate a significant restructuring within the company, with new appointments in key areas of vehicle development and EV manufacturing. This move comes in the aftermath of production technology issues that resulted in GM falling short of its EV output goals. During a call with investors and analysts on November 29, Barra expressed disappointment in the execution of GM’s EV capabilities and Ultium, the company’s EV battery technology.
One of the notable shifts in GM’s EV strategy includes the reconsideration of offering hybrids in the North American market. Initially committed to an all-EV strategy, General Motors is now reassessing its approach, causing delays in planned factories and product launches. This strategic pivot is aimed at addressing the challenges faced in the EV sector, demonstrating Barra’s adaptability and willingness to course-correct when necessary.
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In response to the stock performance and to garner support from shareholders, Barra, along with GM’s board, initiated a $10 billion share repurchase program. This program aims to buy back a quarter of the company’s market capitalization, signaling a commitment to returning value to shareholders, particularly from the profitable North American combustion truck business.
Despite the stock challenges, most shareholders appear content with Barra’s leadership, considering the formidable headwinds faced by the entire automotive industry. Kyle Martin, an analyst with Westwood Group, acknowledges the industry-wide challenges and suggests that Barra is performing relatively well compared to her counterparts. He emphasizes that a few positive developments could potentially trigger a rebound in GM’s stock.
Barra, the first woman to lead a global automaker, has already secured her place in GM’s history. Having held the top position longer than most CEOs in the company’s history, second only to Alfred P. Sloan, she faces a unique set of challenges. Unlike her predecessors, Barra operates in an era defined by intense competition, regulatory pressures, and the imperative to embrace emerging technologies.
Under Barra’s leadership, GM has undertaken significant restructuring, shedding unprofitable operations globally and focusing on sustaining profits over defending an expansive global empire. The market shifts towards electric vehicles, led by companies like Tesla and BYD in China, have prompted Barra to redirect GM’s resources and strategy. While GM retains its leadership position in U.S. sales volume, its valuation significantly lags behind that of Tesla.
Barra’s attempt to reposition GM as a technology enterprise reflects a broader trend in the industry. In a bid to revive investor interest, she outlined a growth strategy in 2021, projecting a doubling of GM’s annual revenue by 2030 to $280 billion. This ambitious goal involves expanding EV offerings, increasing digital subscription sales, advancing the Cruise robotaxi operation, supplying vehicles to the U.S. military, and launching a new electric van delivery service.
However, the latter half of 2023 witnessed challenges to key components of Barra’s growth strategy. Cruise, an autonomous vehicle subsidiary of GM, has faced setbacks, posting losses of $8 billion since General Motors acquired it in 2016. Despite Barra’s optimism about Cruise generating $50 billion in annual revenue by 2030, regulatory challenges have cast uncertainty over its future. A recent incident involving a Cruise driverless car dragging a pedestrian has raised questions about the technology’s safety and efficacy.
In response to the Cruise incident, Barra has engaged external law firms and technical experts to investigate the company’s response. The future trajectory of Cruise, once seen as a cornerstone of GM’s growth strategy, is now uncertain. Barra, having successfully navigated crises in the past, is once again in the role of crisis manager, working to address regulatory concerns and restore confidence in Cruise’s technology.
Despite the challenges, Barra remains forward-looking and optimistic about the future. Her focus on executing the new strategy in the coming years indicates a commitment to guiding General Motors through the electrification transition successfully. In a recent speech at the Washington Economic Club, she expressed her enthusiasm for the next phase of GM’s transformation and her role as CEO.
As Barra approaches a decade at the helm of GM, her legacy is already cemented as a history-making CEO. The first woman to lead a global automaker, she has navigated GM through unprecedented transformations, responding to market dynamics, technological disruptions, and regulatory shifts. Barra’s leadership during the ignition switch scandal in 2014 showcased her ability to address crises transparently and instigate cultural changes within GM.
The road ahead for Barra and GM involves overcoming the challenges in the EV sector, ensuring the success of the revamped growth strategy, and resolving uncertainties surrounding Cruise. As Barra looks forward to the next phase of GM’s transformation, her ability to adapt, lead through crises, and steer the company toward sustained profitability will continue to define her legacy.
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The top shareholders of the company are BlackRock Inc., Vanguard Group Inc., State Street Corp, Capital World Investors, Harris Associates L P, Capital Research Global Investors, and Washington Mutual Investors Fund. The Vanguard Total Stock Market Index Fund Investor Shares and Vanguard 500 Index Fund Investor Shares are also among the largest shareholders.
General Motors Co (NYSE: GM) has a diverse ownership structure, with institutional shareholders owning 81.29%, General Motors Co insiders owning 13.08%, and retail investors owning 5.63%. The largest individual shareholder is Retiree Medical Benefits Trust Uaw, which owns 100.15M shares, representing 7.31% of the company.
Who are the stakeholders of GM?
Apart from the company’s internal stakeholders, the society as a whole can also be considered as an external stakeholder. The company’s key external stakeholders include employees, competitors, environmental concerns, government, suppliers, media, customers, financial institutions, shareholders, and local communities. Each of these stakeholders plays a crucial role in the success of the company and must be taken into consideration when making important decisions. By prioritizing the needs and concerns of these stakeholders, the company can build strong relationships and ensure long-term success.
Who was CEO of GM before Mary Barra?
In 2013, GM appointed her as the new CEO, succeeding Daniel Akerson. Before taking on this role, Barra held the position of executive vice president for global product development, purchasing, and supply chain.