General Motors Co. Chairman and CEO Mary Barra said Tuesday that the company remains focused on its core business including reducing less profitable rental car sales in favor of retail sales, but is also working to propel GM to the forefront of autonomous vehicle development.
“We really believe we’re in the midst of an industry that is transforming and we’re working very hard to lead in that transformation,” she told reporters ahead of GM’s annual shareholders meeting in Detroit.
Earlier this year, GM invested $500 million in ride-hailing company Lyft Inc. and last month it acquired San Francisco-based Cruise Automation, a software company it hopes can help speed development of self-driving car technology. Earlier this year, GM also created Maven, a growing car-sharing service.
GM and other automakers are faced with competitors such as Google and Uber Technologies Inc., which both are working on self-driving vehicles. Many see GM among the leaders in the autonomous vehicle space in part because of its 4G LTE Wi-Fi connections in millions of vehicles and its long history and experience with OnStar.
Barra became the auto industry’s first female CEO when she took over the company in January 2014, and added the chairman title in January 2016. She told Bloomberg Tuesday that the company is undervalued. It echoes comments she made last month at a women’s technology event in Detroit, when she said GM’s emergence with technology, investments in autonomous and new vehicles such as the 2017 Chevrolet Bolt EV would add value and boost the share price.
GM stock closed Tuesday up 24 cents a share, at $30.23. Shares have been trading about $3 a share lower than the company’s initial public offering price of $33 a share in November 2010, and are down more than 10 percent this year.
“We continue to be focused on generating sustained and long-term value for our shareholders,” Barra said. “And that is the focus each and every day for us.”
Barra also was asked about whether GM would increase its stock buyback program in wake of GM’s stagnant share price. She said the company first would make investments in the business, maintain a “investment grade balance sheet” and the remainder would be returned to shareholders. She said GM would continue its focus to deliver “superior results” and that it is growing profit margins.
“We’re going to continue to do what we say we’re going to do, and we believe that over time, that will be reflected in the share price,” she said.
Barra told reporters ahead of the meeting that GM remains committed to its strategy to reduce rental car fleet sales in favor of selling more vehicles to retail consumers, despite the company’s May sales falling 18 percent year-over-year and its market share dropping from 17.9 percent to 15.7 percent. Retail sales generally are more profitable than sales to rental car companies.
“We’re going to continue to do that, looking for the quality of the sale, keeping that discipline,” Barra said. “Again, we aren’t changing from that strategy at all. We think it’s very core not only to strengthen the business, (but to) strengthen residuals (resale values), so it has benefits. But also that will position us well, when and if, the cycle turns.”
GM’s large sales decline in May also was due to limited supply of some new vehicles and because four North American plants lost two weeks of production due to a shortage of parts from a supplier. The supplier had issues stemming from the recent Japanese earthquakes. Production at another large SUV plant also was down all month as the plant retooled for new vehicles.
The company in 2015 earned a record $9.7 billion, posted $152.4 billion in revenue and returned $5.7 billion to shareholders. Barra said GM continues to show strength in North America and China and she reaffirmed the company’s goal to break even in Europe this year. GM executives already have said that the company would post improved business results this year compared with 2015.
Shareholders preliminary voted to elect 12 directors to the board, selected Deloitte & Touche LLP as GM’s accounting firm for 2016, and approved an advisory vote on executive pay.
Jane Mendillo, retired president and CEO of the Harvard Management Co., Harvard’s endowment fund, joined the board. Mendillo becomes the 12th member now that former GM Vice Chairman Steve Girsky decided he wouldn’t seek re-election. Girsky had served on the board since July 2009 following the company’s bankruptcy and GM’s emergence as a new company and was a key figure in the company’s turnaround.