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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.

The Chinese experiment | 2017 Buick Envision First Drive

The 2017 Buick Envision is a very good five-passenger crossover. The "but" you should anticipate will come in good time. First it's worth understanding why it exists at all. Out of the ashes of GM's bankruptcy a few flowers blossomed and the carmaker is doing exceptionally well, certainly far better than Chrysler has done in the wake of its free fall into Chapter 11. But of all the surprises at GM's turnaround, Buick surely ranks highest, without question the least likely player to thrive if you only study the North American market. Look farther than our shores, to China, however, and you won't be shocked. Note that the Envision, which has been on sale in China for a year and a half, will reach about 200,000 units this year; the entire Buick portfolio in the US only totaled 223,000 cars in 2015. Not only is China Buick's primary market, but what it makes there, like the Envision, is intended for a different sort of buyer. Here, we'd call it a compact crossover. In China the Envision is a relatively large car, and the buyer there is far more likely to use it as a tall limo, or at the very least, as a big-time status statement. That buyer is also very likely to be in his or her mid-30s – the average Buick buyer in the US is getting younger, but, at 58, is hardly a millennial. Still, Americans who buy the Envision will benefit from all of this China focus. Huge effort went into its development since the target competitor in China is the Audi Q5, according to Rick Spina, Executive Chief Engineer for the Envision. Spina explained that Buick went to the trouble and expense of isolating the entire chassis from engine, suspension, and driveline vibration and sound penetration. "If you look at non-luxury models like Ford Escape, Honda CR-V, nothing's isolated, everything is hard-bolted to the body, and so all that vibration goes into the frame." Spina says that even though you'd guess the China-built Envision shares the general parts bin of the Chevy Cruze and Equinox, it's almost entirely unique. "It's kind of an orphan," he says, because GM couldn't afford to invest in the ride tuning Buick had to have to compete with Audi in China for a volume Chevy product, so nothing from Chevy (for now) is on this platform. And although it would have made sense to have Cadillac or GMC share it, Cadillac's XT5 and GMC's Acadia were already on a different development cycle. Besides, he's pretty proud that the Envision was developed strictly for Buick.

Buick working on Encore refresh

It's been three years now since the model we know as the Buick Encore (sold overseas as the Vauxhall/Opel Mokka) first hit the scene. That makes it about due for a bit of a facelift, and judging from these latest spy shots, that's precisely what General Motors seems to be up to. The nose of this prototype (intriguingly wearing Buick badges but German plates) is all covered up, so it's hard to tell what Buick and its European counterparts have in store for the front-end restyling, but the fact that they've covered it so extensively tells us that somethings afoot. The tail should also get new lights and bumper as well. You can fully expect GM to take the opportunity to refresh the cabin while it's at it with tweaked ergonomics and new equipment. Meanwhile our sources tell us the 1.0-liter inline-three from the new Corsa could find its way under the Opel/Vauxhall's hood to join the current lineup of four-pots, but it's too early to say whether that engine might find its way across the pond to the Buick version as well.