GM completes exit from bankruptcy protection

Reinventing General Motors

General Motors completed an unusually quick exit from bankruptcy protection yesterday with ambitions of making money and building cars people are eager to buy.

Once the world's largest and most powerful automaker, the new GM is now leaner, cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. And the U.S. government holds a majority stake in what was a publicly held company.

"It's nice to have a clean slate finally," said Ross Luck, general manager at family-owned Luck Chevrolet in Ashland. "It's a good day for the GM dealers that are still around just to have some closure."

But GM, which spent 40 days under court supervision, far shorter than anyone predicted, faces the worst auto sales slump in a quarter-century.

At a news conference, CEO Fritz Henderson said the revamped automaker will be faster and more responsive to customers than the old one. It will generate cash and repay billions in government loans ahead of a 2015 deadline.

The new company will build more cars and trucks that consumers want and launch them faster than in the past, the CEO said. GM also announced plans to experiment with auctioning new cars on eBay, expanding on an existing partnership covering certified used vehicles.

"We recognize that we've been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done," he said.

Known for its sluggish decision-making process and bloated management ranks, General Motors Corp. will streamline its bureaucratic management structure, cutting U.S. salaried employment by 20 percent, or 6,150 positions, by the end of 2009. The cuts include 450 executive jobs.

Henderson, who was promoted to chief executive in March, will run the global company and oversee its North American operations. GM's former chief operating officer, Henderson was chosen when President Barack Obama said former CEO Rick Wagoner's restructuring plans didn't go far enough.

In its heyday three decades ago, GM had 700,000 employees. After closures and consolidations, the company will have about 64,000 employees by the end of this year.

"General Motors is not the General Motors of old," said George Hoffer, economics professor and transportation-industry expert at Virginia Commonwealth University. "The old adage of what is good for GM is good for the country is no longer true."

GM moves forward with only four brands -- Chevrolet, Buick, Cadillac and GMC Truck -- but the Chevy brand is the most important, Hoffer said.

In 1995, Chevy accounted for 35 percent of GM's sales volume. In the first six months of this year, Chevy represented 70 percent of sales made by the four brands GM is retaining.

"As the brand Chevy goes, that will be how General Motors goes," Hoffer said. "In essence, GM has really turned into Chevrolet."

He said GM is in a good spot because it has new models to offer and new ones coming online, but it faces a possible problem of federal intrusion. GM has a line of big cars and SUVs, contrary to the fuel-efficient models the Obama administration has been pitching, Hoffer said.

"Will the Obama administration be so hung up that it is so philosophically against the . . . vehicles that it will not allow GM to go where the market wants GM to go?" Hoffer said. "The American public may not want to go green."

Henderson said the U.S. government, which owns a majority stake in GM, has vowed that it would not get involved in day-to-day decisions.

"If we don't get this right, nothing else is going to work," he said. "Business as usual is over at General Motors."

The automaker is launching a "Tell Fritz" Web site to allow owners and the public to share their concerns with senior management, and Henderson plans to go out on the road every month.

He said GM plans to partner with eBay in California to allow consumers to bid on vehicles just as they would in a typical eBay auction. They could also choose a "Buy It Now" option to purchase the car at a set price. Dealers would still distribute the cars.

Concessions made by the United Auto Workers union just before the company entered bankruptcy protection have brought GM's labor costs down to where they are fully competitive with Toyota Motor Corp., Henderson said.

The parts of GM not moving to the new company will become part of "old GM," a collection of assets and liabilities that will be sold to pay creditors.

Staff writer Emily C. Dooley and The Associated Press contributed to this report.