GM has several new cars coming to market next year, including the Chevrolet Volt, a plug-in hybrid electric car. The Volt might be a promising vehicle, but with an expected $40,000 price tag it might only be a niche player, said James E. Schrager, clinical professor of entrepreneurship and strategy at the University of Chicago Graduate School of Business.
Upcoming small-car models such as the Chevy Cruze and Spark may fare well, but will face heavy competition from foreign auto makers already in that segment of the market and from Ford Motor Co.'s new Fiesta, which the company has already started advertising.
The problem is the status of General Motors' brands
Overall, GM's major challenge will be winning back customers who have migrated to foreign competitors. Some newer GM models have received good reviews for quality and performance, but that hasn't persuaded enough consumers to buy GM cars.
“The problem is the status of General Motors' brands,” Mr. Schrager said. “They have to have some really breakthrough products that work and resonate with consumers. And they may have to slowly, over time, turn the image around.”
The company has received $50-billion in taxpayer funds. In exchange for those funds, the government will own about 61 per cent of the “new GM.” The Obama administration has said it does not plan to interfere with the day-to-day running of the company, though government has been involved in the selection of the new company's 13-member board of directors and change of control transactions.
The company, in consultation with the government, named former AT&T Inc. CEO Ed Mr. Whitacre to chair the board. Whitacre is in the process of choosing four new directors.
The United Auto Workers union, which gets a 17.5 per cent stake through its health care trust for retirees, has selected Stephen Girsky, a former GM adviser and Morgan Stanley analyst, to serve on the board. The Canadian government, which will control an 11.7 per cent share, also will pick one member.
Mr. Henderson, who succeeded former CEO Rick Wagoner in March when the Obama administration forced Wagoner to resign, has said he expects to remain at the helm of the auto maker as it comes out of bankruptcy.
Mr. Henderson has already said he would cut about 34 per cent of GM's executive ranks by the end of the year.
Assets that GM does not sell to the new company will become part of the separate “old GM,” which the company said Monday will be known as Motors Liquidation Co., and will be sold to the highest bidder under court supervision.
The old GM will include a smattering of properties, several of which are facilities already slated to be closed.
Other assets to be filed under the old GM include brands like Hummer, Saturn and Saab, for which GM has lined up buyers. They also include all current GM common stock, which – despite its active trading on over-the-counter markets – will soon be worthless.
The old GM will remain an entity until all of the facilities are sold off, a process that could take months or years to complete.
The government has said it plans to provide about $1.18-billion to fund the wind-down process.
