New GM Seeks To Overcome Its Old Image

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Cars are seen at a Cadillac dealer in Yonkers, N.Y., in 2009. i

Cars are seen at a Cadillac dealer in Yonkers, N.Y. Customers are only gradually returning to auto showrooms. Don Emmert/Getty Images hide caption

toggle caption Don Emmert/Getty Images
Cars are seen at a Cadillac dealer in Yonkers, N.Y., in 2009.

Cars are seen at a Cadillac dealer in Yonkers, N.Y. Customers are only gradually returning to auto showrooms.

Don Emmert/Getty Images

General Motors is about to set the share price for its initial public offering on the New York Stock Exchange. Investor interest in Thursday's IPO has been surprisingly strong, and the company is expected to announce a higher share price than originally planned.

The IPO is a beginning of the new GM, as it tries to shed both government ownership and some of its own legacy.

James Lee sells cars at Mark Chevrolet in Wayne, Mich. He's hoping to close a sale with a customer interested in GM's newest small car, the Chevy Cruze.

The reality is, sales are still slow, and not just for GM. Customers are only gradually returning to showrooms. But Lee is pretty bullish on GM.  He's even thinking he'll take some of his own money and invest in the IPO.

"I think the market's gonna go up for General Motors," he says. "They're doing good overseas, coming out with some real strong product. If I buy it now, in 3-to-4 years, it will at least double if not triple."

As a small investor, it's unlikely Lee will get a chance at the IPO. But some big investors appear to share his optimism. They seem undaunted by the specter of last year's bankruptcy, which made GM stock virtually worthless for hundreds of thousands of investors.

Emerging From A Near-Death Experience

GM's downfall still hurt a lot of people, even those with just a passing association with the company. Darnell Wilson, who used to work for GM, brought his son to Mark Chevrolet to look at that Chevy Cruze.

"I try to rationalize, and say well, we never know, we had to do what we had to do in order to survive," Wilson says. "It was painful because I felt like a lot of people could possibly lose their jobs. But I was glad to see them come out [of bankruptcy] as fast as they did."

No one knew how customers would react to the bankruptcy. Sure, it slashed the company's staggering debt load, reduced labor costs and shut plants. But it came with the huge risk that even GM loyalists might flee. That didn't happen, and in fact, GM's latest cars are attracting new customers.

Chris Cabana, general manager of Mark Chevrolet, says the old GM made a lot of cars that were hard to sell. Now it's a different story.

"We don't have to compare interior dimensions between this vehicle and that vehicle, they sell themselves," Cabana says.

Maintaining The Momentum

The improvement in GM's outlook is not just in the U.S. GM was the first global automaker to break the 2-million-vehicle sales mark in China. But auto industry consultant Jim Hall says maintaining that momentum won't be easy.

"The idea that the IPO means it's all done and GM is out of the woods isn't true," he says.

Hall says GM's real problem isn't the bankruptcy, it's the company's old culture. For decades, GM leaders protected internal fiefdoms at the expensive of the core business. The old GM sold cars with quality issues at a loss just to protect its market share. In the end, it lost the market share anyway.

Hall says the new GM has to stick with the basics: Make good quality cars that people want, and sell them at a profit.

"GM is in a position now where it can reassume that philosophy — if they want to — and we're gonna see what happens," Hall says.

As for the IPO, investor interest is stronger than even Steve Rattner expected.  He was President Obama's former head of the auto task force — and the man who shepherded GM through bankruptcy in record time. Earlier this week, Rattner predicted the government could sell all its GM stock within two years.  And he believes taxpayers could see a return of almost all their $43 billion investment in GM.



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