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Frustrated GM investors ask what more Mary Barra can do

DETROIT — General Motors Co Chief Executive Mary Barra has transformed the No. 1 U.S. automaker in her almost five years in charge, but that is still not enough to satisfy investors. Ahead of third-quarter results due on Oct. 31, GM shares are trading about 6 percent below the $33 per share price at which they launched in 2010 in a post-bankruptcy initial public offering. The Detroit carmaker's stock is down 22 percent since Barra took over in January 2014. After hitting an all-time high of $46.48 on Oct. 24, 2017, the shares have declined 33 percent. In the same period, the Standard & Poor's 500 index has climbed 7.8 percent. Several shareholders contacted by Reuters said GM could face a third major action by activist shareholders in less than four years if the share price does not improve. "I've been expecting it," said John Levin, chairman of Levin Capital Strategies. "It just seems a tempting morsel to somebody." Levin's firm owns more than seven million GM shares. Barra has guided the company through the settlement of a federal criminal probe of a mishandled safety recall, sold off money-losing European operations, and returned $25 billion to shareholders through dividends and stock buybacks from 2012 through 2017. GM declined to comment for this story, but the company's executives privately express frustration with the market's reluctance to see it as anything more than a manufacturer tied mainly to auto market sales cycles. GM's profitable North American truck and SUV business and its money-making China operations are valued at just $14 billion, excluding the value of GM's stake in its $14.6 billion Cruise automated vehicle business and its cash reserves from its $44 billion market capitalization. The recent slump in the Chinese market, GM's largest, and plateauing U.S. demand are ratcheting up the pressure. GM is one of the few global automakers without a founding family or a government to serve as a bulwark against corporate raiders. In 2015, a group led by investor Harry Wilson pressed GM to launch a $5 billion share buyback, and commit to what is now an $18 billion ceiling on the level of cash the company would hold. In 2017, GM fended off a call by hedge fund manager David Einhorn to split its common stock shares into two classes. Einhorn, whose firm still owned more than 21 million shares at the end of June, declined to comment about GM's stock price. Other investors said there were no clear alternatives to Barra's approach.

GM won't really kill off the Chevy Volt and Cadillac CT6, will it?

General Motors is apparently considering killing off six slow-selling models by 2020, according to Reuters. But is that really likely? The news is mentioned in a story where UAW president Dennis Williams notes that slumping US car sales could threaten jobs at low-volume factories. Still, we're skeptical that GM is really serious about killing those cars. Reuters specifically calls out the Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala, Chevrolet Sonic, and the Chevrolet Volt. Most of these have been redesigned or refreshed within the past few model years. Four - the LaCrosse, Impala, CT6, and Volt - are built in the Hamtramck factory in Detroit. That plant has made only 35,000 cars this year - down 32 percent from 2016. A typical GM plant builds 200,000-300,000 vehicles a year. Of all the cars Williams listed, killing the XTS, Impala, and Sonic make the most sense. They're older and don't sell particularly well. On the other hand, axing the other three seems like an odd move. It would leave Buick and Cadillac without flagship sedans, at least until the rumored Cadillac CT8 arrives. The CT6 was a big investment for GM and backing out after just a few years would be a huge loss. It also uses GM's latest and best materials and technology, making us even more skeptical. The Volt is a hugely important car for Chevrolet, and supplementing it with a crossover makes more sense than replacing it with one. Offering one model with a range of powertrain variants like the Hyundai Ioniq and Toyota Prius might be another route GM could take. All six of these vehicles are sedans, Yes, crossover sales are booming, but there's still a huge market for cars. Backing away from these would be essentially giving up sales to competitors from around the globe. The UAW might simply be publicly pushing GM to move crossover production to Hamtramck to avoid closing the plant and laying off workers. Sales of passenger cars are down across both GM and the industry. Consolidating production in other plants and closing Hamtramck rather than having a single facility focus on sedans might make more sense from a business perspective. GM is also trying to reduce its unsold inventory, meaning current production may be slowed or halted while current cars move into customer hands. There's a lot of politics that goes into building a car. GM wants to do what makes the most sense from a business perspective, while the UAW doesn't workers to lose their jobs when a factory closes.

2017 Buick LaCrosse First Drive

The 2017 Buick LaCrosse seems destined to never get the credit it deserves. It's bound to be dismissed as just another full-size sedan relic, ignored by those who habitually visit their Lexus dealer every few years for a new ES. This new LaCrosse will inevitably be overshadowed in the Buick showroom by SUVs and never fully appreciated by the majority of its buyers who simply want a big, comfy, and quiet car. That destiny would be a shame. The completely redesigned LaCrosse is now a legitimate luxury car, not because advertisements say it is, but for the way it drives, the way it looks, and the way it cossets you inside. The former is really the most impressive, since it's also the most surprising. During the LaCrosse press launch in Portland, Oregon, Buick boasted how comfortable and exceedingly quiet the car is, and indeed, it isolates road imperfections and allows for a pair of low talkers to converse in subdued tones. The big Buick sedan's low-effort steering will also satisfy the nice-and-easy tastes of most drivers. The best way to describe driving the LaCrosse is "unwaveringly pleasant." Yet, during that pleasant drive, road dips and mid-corner undulations don't make the comfort-tuned suspension bob and bound like its competitors might. Its body control and generally planted nature encourage speeds and confidence to creep ever so higher through successive sweeping corners on Oregon's densely forested Mist-Clatskanie Highway. Even that low-effort steering demonstrates precision, linearity, and just enough feedback to further spur on such a pace. This unexpected capability is best observed on cars equipped with the optional 20-inch wheels, which supplant the standard 18s and, more importantly, bring with them Continuous Damping Control (CDC) and GM's HiPer Strut front suspension, which is designed to quell torque steer and further improve cornering grip. You don't even have to engage CDC's firmer Sport mode to appreciate the LaCrosse's surprisingly sharp road manners. "We unleashed the engineers," chief engineer Jeffrey Yanssens said after our test drive. "I told them, 'I don't care how much it costs. I want you to know your system and I want your system to be the best it can be. What do you have to do to make that happen and what can I do to enable you to make that happen?'" Yanssens is honest and clearly proud of his team's work.