2008 Chicago Auto Show: Key Note Address By Troy Clarke President, General Motors North America

More Choice, More Votes”

Thank you, and good morning everyone. This is a great venue for an auto show. You’ve really struck a great balance, especially for GM, of being to showcase products, but also this is a selling show, and we appreciate that.

I also appreciate everyone getting up so early … I know most of us were up late keeping track of the Super Tuesday results.

It was a lot to take in … analysis from nearly half the country … who won … and who didn’t. Then, of course, there’s all the commentary on who could have won, who should have won, and who won within various demographic and economic elements of our society.

But what I found most interesting was watching the commentary from the voters … learning what’s reallyon people’s minds. The voters didn’t dissect Clinton’s use of the word “change” versus Obama’s, or discuss Romney’s early campaign strategy versus McCain’s. Instead, the voters talked about the economy. They talked about the cost of college. They focused on Iraq … and taxes … and immigration.

The voice of the people is what interests me most about our business as well. Ask a potential customer about the auto industry, and they don’t talk about who’s the global automotive sales leader, or any automaker having a new CEO, or the unique market dynamics of Japan.

No, they’ll tell you about the cost of gas … or the cost of ownership. They’ll talk about the way a vehicle looks … or drives … or how comfortable it is … or whether it fits the needs of their family.

And, it’s up to us – the automakers – to find the product and technology solutions that meet their needs. Because, like the political candidates, ultimately, the public has our fate in their hands. They cast their votes every time a new vehicle is purchased. They decide who wins and loses, and what products are right for the market.

And that’s what I’d like to talk about this morning. When it comes to the pending election, the candidates will tell you that the nation is at a crossroads. There are important issues that must be addressed. And, then they’ll tell you that they are the right person at the right time in history. They reach out to us with their “vision” of a better America … with their “vision” of a better future.

Now, don’t laugh … but this is exactly how automakers think as well. I am here to tell you that when it comes to personal transportation, and the auto industry, our way of life is at a crossroads.

There are important issues that must be addressed. I’m talking about energy security, climate change and the cost of tranportation, which contributes to the cost of vehicle ownership.

Let there be no doubt GM wants your vote. Our slate of candidates – Chevrolet, Cadillac, GMC, Pontiac, Buick and Saturn – are running on the platform of what we call energy solutions.

I want to reach out to you with a “vision” for better energy solutions and a better future. You can tell me if you think it means a better America.

I want to present our vision in three parts. First, the voice of the customer … the person who votes with his or her wallet. Second, the role of the future … its promise and risk. And, finally, the role of technology. All three of which are interrelated.

Starting with the people, which is first and foremost on our list for good reason. We – the industry, to include GM – have to develop cars and trucks that people will want to buy … not just what we may want to sell them.

You know, one way to address the energy related issues we face is to go find the most fuel efficient vehicle in the market and mandate that all automakers must reproduce this particular approach or energy solution.

Of course, no one would ever propose such an approach. Why? Because it wouldn’t work. Large numbers of customers would reject this effort because it doesn’t take their needs, wants and desires into account. Extremely small vehicles wouldn’t satisfy some customers even if they got 100 miles per gallon.

Customers will not be a bystander in this process. They will be at the center of it. They won’t appreciate how difficult the tasks are that we face, but they will remind us with their patronage. Often they won’t be able to tell you exactly what they want. But, as an industry, we must be attentive and seek to understand their needs, even anticipate them.

For example, look at iTunes and the iPod. Apple probably didn’t respond to a specific customer request for a handheld music player that had those characteristics. They did know that people wanted to listen to the music they choose, not what someone else wanted to play for them. Apple sensed a need, perhaps anticipated it better than anyone else, and applied technology to offer more choice. I think we’d all agree that people responded. The people voted for this solution.

Our industry, and GM, must be close enough to our customers that we can anticipate their wants and needs before they may recognize them. This is important given the long lead times of our industry. We need to sense what people will want four or five years from now.

Last year, I attended a focus group in the LA area. It was one of those “behind the mirror” kind of things. I try to do that whenever I visit a major city or market. When questioned if they would like to have a “green” vehicle, these LA folks responded, of course, yes. And, what type of vehicle would that be? They went on to describe the equivalent of a Chevy Tahoe that gets 45 miles per gallon.

This isn’t the first time we had heard this input. The utility, sense of security, and comfort and compelling attributes of our full-size SUVs. We have done a pretty good job of getting to know the full-size ute customer. And, as a result, we currently enjoy about 70 percent market share in this segment. And, that’s share we held onto … even grew just slightly … last year as well.

Of course, in sensing customer needs, we weren’t satisfied that this was good enough. So, we created a new series of crossover utilities. Ten years ago, do you think customers told us, “I’d really like a crossover vehicle next”? Of course not … a crossover was still a relatively new term … and most people thought it was a move on the basketball court … not a vehicle.

But, we listened to what people were telling us they wanted … the functionality … the design… the comfort… the economy … and we looked ahead and built vehicles suited to meet those needs. We provided more choice by bringing to market different vehicles. In fact, we sold 59,000 fuel-efficient crossovers in 2001. Last year, we sold nearly 500,000.

Our newest crossovers – the Buick Enclave, GMC Acadia, and Saturn Outlook – are a big reason for our success. They helped our midsize crossover volume jump 225 percent last year. In fact, we can’t keep the Enclave on the showroom floors. It’s one of those problems I’m happy to have.

We have several well positioned entries that are doing exceptionally well, but in this segment, I think the needs are so strong, there’s even more room to grow. We’re not stopping with the great vehicles we already have in the midsize crossover segment. We’re expanding our success to our foundation brand … and I hope you’ll all come the Chevrolet press conference after breakfast to get a better look at why I’m so enthusiastic.

And, so my first point was that we always need to be anticipating what’s next. Varying customer groups have varying needs. And, I don’t expect that to change.

For example, when I talk to customers on the west coast, they talk about “going green” and wanting to do business with environmentally friendly companies. In Miami, customers told me about the high cost of gasoline and the other cost of living they face, and why M-P-G needed to be boosted in their cars. In New York, the small urban-looking cars get rave reviews. In Texas, they still love their trucks. And, in the Midwest, there are lots of family concerns, like needing room for the kids … and the neighbor’s kids … and the dog … while still looking good and getting decent gas mileage.

People have different needs. They always have, and likely, always will. It’s why Alfred Sloan devised his legendary “car for every purpose and every purse” strategy. It was a solid plan, and time hasn’t changed that.

So, our vision for energy solutions and more starts with the customer. To my second point, let’s talk about the future. You will recall that I mentioned its opportunities and risks.

Think about this: I recently heard that the rate of scientific innovation will increase 40-fold between now and 2023. That’s remarkable considering that if you looked at today’s technology and went back the equivalent of a 40-fold increase, you would have to go back to 1880.
Can you imagine debating the future of the automobile when it hadn’t been invented yet?
Likely, back in 1880, they were debating steam locomotives. Can anyone here tell me the impact of steam locomotives on the environment? Or who had the highest quality, or used the most incentives? Of course not. Nobody cares, because we’re not using locomotives any more.
The frightening thing is that the things we spend so much time worrying about today … the “apparent” technological energy solutions may not be relevant in 2023.
Our vision is one of wonderous technological change. But, it’s a future of significant invention, investment, and risk.
Building on the concept of voice of the customer, we can hedge our risk by bringing a broad set of solutions to the issues we face.
A great example here is the “green” space. Concern for climate change, high gas prices, government regulation, the need to import more and more oil… there are a lot of issues, and a number of ways to go about tackling them.
For GM, the solution involves developing multiple solutions to give the customer choice. Because, just like there are a variety of ways to meet customer needs, there are a variety of ways to get at fuel economy and emissions. And, I want to be clear on this: that’s the main driver for General Motors – we want to stay ahead of the game to bring our best technological solutions to market for our customers. We believe – as always – they will decide which technologies best meet their needs.
In fact, one of the biggest misperceptions of the auto industry is the misconstrued thought that we fight every government regulation out there. It’s commonly thought that we’d prefer to build what we want. I’ve heard a lot – too much – about Detroit’s affinity for gas-guzzlers.
So, let me set the record straight: The truth is, we’ve been making strides in emissions and fuel economy for years. Our customers wanted better fuel economy, and we wanted to provide solutions. They decide what we bring to market.
And, it’s hard to believe, but that’s why we’re in favor of working to meet higher fuel economy standards … we’ve been working toward that. However, extreme standards could have an unintended effect on the customer … something I’m sure they wouldn’t want.
As we work to dramatically increase fuel economy on today’s engines … the “locomotives” that will one day be replaced with future technology … it could end up costing the consumer a lot more. What you will save at the pump, you could end up paying even more for in technology … or the lightweight materials needed to help meet the regulations.
So, if we’re really interested in giving consumers choice … and not pricing them out of the vehicles they want … and if we want to quit importing so much oil and producing so many greenhouse gas emissions… we need to think about many other solutions. And, we are.
Of course, we’ll keep working to improve the internal combustion engine … just like we’ve been doing. But, I’m not going to insist that everyone start driving Saturn Astras or Chevy Cobalts … not that I wouldn’t be happy to take your orders if you’d like to get into one of those fine cars … or any of the many others we have that get over 30 miles per gallon.
We know some people need bigger vehicles, which is why we’re also introducing three new full-size hybrid utilities this year: the Chevy Tahoe, the GMC Yukon and the Cadillac Escalade. Those are vehicles that get the city fuel economy of a four-cylinder Toyota Camry, but in a full-size SUV package.
Because, let’s face it … if you have to trailer a boat, or have a big family, or even a few pets … other fuel efficient vehicles aren’t going to do it for you. So, again, we didn’t try to dictate what people purchase. We just wanted to give more options … to meet buyers’ needs … and yes, defend our share in an important segment.
Same holds true for full-size trucks. GM not only makes the most fuel-efficient trucks on the market … but we are also offering them as hybrids. It’s about choice and doing right by our customers … whether they want to save gasoline or save the planet.
This is a good place to segue to my final point: knowledge of the customer, a broad set of options. It comes down to technology. Our vision of the future is based on technology … so let me quickly sum up some of our efforts here.
General Motors is right in the middle of a massive rollout of hybrids. By the end of this year, GM will be selling eight different hybrid models in the U.S. In fact, we’ll introduce 16 new hybrid vehicles over the next four years.

And, in Detroit last month, we unveiled the Saturn VUE Plug-In Hybrid. It will feature an advanced lithium-ion battery, and potentially twice the fuel economy of any SUV on the road today. So, the customer choice continues.
But, we know that internal combustion engines, and even hybrids, may not be the long-term solutions. So, we’re not only focused on those technologies.
There are a number of technologies we’re working on. For example, by far, the quickest way to make impact emissions would be to increase production of ethanol, ethanol-capable vehicles, and ethanol distributors.
If all the flex-fuel vehicles that GM, Ford, and Chrysler have on the road … plus those that we’ve already committed to produce over the next 12 years, through 2020… were to run on E-85 ethanol, we could displace 29 billion gallons of gasoline annually… or 18 percent of the projected petroleum usage at that time.

And if all manufacturers in the U.S. made that same commitment, we could save 53 billion gallons of gasoline annually… or 32 percent of our petroleum usage.

Nothing else we can do gets even close to that kind of impact, that soon. Absolutely nothing.

What’s more, ethanol offers a cleaner alternative to petroleum… it’s adaptable to our current refueling infrastructure… it doesn’t have to be imported… and it requires little change in consumer behavior.

That’s why we were so pleased to announce our partnership with Coskata, Incorporated, of Warrenville.
Speaking of Coskata, our partnership to rapidly commercialize their breakthrough technology is getting another boost today. Coskata just announced a strategic alliance with the largest builder of ethanol plants in the country to construct their first commercial production plant. To me, this is further evidence that we chose wisely for our first partnership in the ethanol space.
I’ll be visiting Coskata’s labs later today, where I look forward to learning more about their proprietary process that produces ethanol at a projected cost of less than one-dollar-per-gallon. And, they can do this using almost any source material … everything from agricultural waste to old tires.

Coskata’s cellulosic process is expected to use less than one gallon of water, per gallon of ethanol produced. At the same time, it will create more than seven times that amount of energy… both ratios that are much better than current ethanol production.

And, this is no science experiment. Coskata expects to have their pilot plant up and running late this year. Next is a plant capable of producing 50 to 100 million gallons of ethanol a year by 2011. And, then the ramp up will continue. And, that’s a good thing … because we’re looking forward to using the ethanol at our proving grounds back in Michigan.
I’m very pleased that Bill Roe, president and CEO of Coskata, was able to join us today. Bill is a visionary … and his company can make a true impact not only on our transportation, but also on our environment.

I think Bill’s company is doing its part. And, at GM, we’re working to do ours. We’ve already got two-and-a-half million flex-fuel vehicles on the road today – vehicles that can run on gasoline, ethanol, or any combination of the two.
We currently have 11 models that can run on E-85 … and I’m pleased to say that we have even more coming. Today, we’re announcing that one of those vehicles will be the 2010 Chevrolet HHR … and importantly, the HHR will have the very first four-cylinder engine that GM North America will offer as flex-fuel capable.
That opens the door for many more GM products with the Ecotec 2.2- or 2.4-liter engines to become compatible with E85. This will enable us to fulfill our pledge to make half of the vehicles we produce flex-fuel capable by 2012.
However, to realize the potential that these vehicles can offer, we must make ethanol readily available to customers … by dramatically expanding the number of ethanol fueling stations. And, it’s also time for the U.S. government, either through further incentives or regulation, to address this matter.

For the long-term, we’re working on extended range electric vehicles. It’s why we’ve been focused on showcasing our E-Flex propulsion system, and the terrific Chevy Volt concept… and several E-Flex variants… including an E-Flex fuel cell Volt, the Opel and Saturn Flextreme, and very recently, the E-Flex fuel cell Cadillac Provoq.
In fact, it’d be great if the government could give battery research the same attention they’ve given fuel economy. I think the industry would appreciate the support in bringing these next generation products to market … and I know our customers would as well.
We’ve also got the world’s largest test fleet of fuel cell vehicles on the road today. We’re in the process of placing 100 of these Chevy Equinoxes in the hands of potential customers here in the U.S. to get their feedback and use it for future planning.
We’ve demonstrated our commitment to a range of advanced propulsion technologies that will the reduce growth in oil consumption and in oil imports. And, at the same time, we’ll be giving customers what they want – a variety of vehicle choices and technologies to suit their needs.
As I said earlier, we don’t only want to respond to the needs of the market … we want to anticipate them. That’s why we’re developing our next generation of vehicles with the customer in mind … at the same time, we’re keeping in mind that customers vary greatly, and that no automaker can’t dictate what they’ll want, or just as important, what they’ll buy. That’s why we need to be open to many different solutions to meet their needs.
Our eye is on the future. We’re laying out a plan for long-term success. And, our focus on the customer is at the heart of that plan. We’ll adjust as we go. We won’t get every vote. But, at the end of the day, we’ll have more customers who are pleased to have better products, with better technology and more choice than ever before.
We’re looking forward to showing you some of our newest products and ideas … our compelling vision … during the next few hours and within the coming days. I’d appreciate your thoughts on what you see, and I thank you for your time this morning.