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Behind the Wheel of GM's New Lineup

Rachel Haig

Rachel Haig: I'm Rachel Haig for Morningstar.com. We are at the Chicago Auto Show, and I am here with GM North America President Mark Reuss. Thanks for joining me, Mark.

Mark Reuss: Thank you. Rachel. Thank you for having us today.

Haig: You talked this morning in your keynote about what GM's strategy changes are and how they're targeting the consumer more. What is the outlook for profitability in North America?

Reuss: Well, North America has become--we had a great month here in January, so we had a couple of big, big points here. Number one, with our four brands, we actually raised market share and our sales are up by 14%, 30% in our core brands that we are now selling at retail with our new launches and our new products. The Malibu outsold the Camry for the first time, so Chevrolet is beginning to fill the role here that we want it to as sort of the big brand for GM.

That's really positive news. The profitability piece of this, we announced that we'll have the loans for both Canada and the United States paid back by June. We aim to do it; that's what's going to happen. You're going to see some pretty good things here happening here week-by-week, month-by-month, customer-by-customer.

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Haig: All right. And it seems like a big part of your strategy is also the electric vehicle, with the Volt. In terms of momentum for the Volt, have you seen it decrease now that gas prices are lower, and do you think the demand will be there from the consumers?

Reuss: Yeah, I don't think that gas prices on a car like the Volt are necessarily the only reason why people are looking to buy that car. That car is almost zero emissions, number one. It's an electric car that's driven all the time by the battery and electricity, with a small generator on board.

This is a big paradigm shift from what we've traditionally called, in the marketplace, hybrids. It's really an extended-range electric vehicle. I want to feel good about driving a vehicle that has almost zero emissions and really high fuel economy, and driven by electricity as much as possible. I think everybody else will, too.

This is all about a reflection of who you are. The car is still a reflection of who you are, what you value, and what makes you feel good. And I think the Volt will do all of those, independent of gas prices.

Haig: That makes sense. And then another issue has been the price of lithium ion batteries. Do you think that will be a challenge in terms of the profitability of the Volt?

Reuss: It's in the first generation of it, but we're looking at the Volt as sort of a strategy for a long-term strategy in terms of parts, batteries. We announced last week that we are going to actually manufacture the electric motors within GM for that.

So the proprietary technology along with LG on the first gen for those lithium ion battery cells and how we combine that into a car, that's something we're going to leverage across a lot of different vehicles here. You'll see that happening.

And so to look at one car and say, "Is the car profitable or not," I think you need to look at that whole strategy, the manufacturing strategy, and the intellectual property that's generated by that, and then how it's shared across the company.

Haig: And then right now you have the Chevy Cruze, which is already getting 40 miles per gallon, and it's not even a hybrid. Do you think that already fills the role in some way?

Reuss: Well, it does. You won't get as quite as high fuel economy as a pure electric with extended range generator; however, a lot of people can't afford some of the pure hybrids that we've seen in the past or an extended range option.

So the 40 mile per gallon with Cruze with a 1.4 turbo... I drove the car for about five hours here last Friday. It's a lot of fun to drive. It's a little bit bigger car than some of the cars in its class, in the compact class like Civic, but you get hybrid-like fuel economy at 40 miles per gallon. That's a solution that's going to be very attractive and very affordable to a lot of people.

Haig: Yeah, that definitely makes sense. And then in the luxury space, you have the Cadillac XTS concept, and it seems like you're going after a new way of targeting the luxury consumers. How exactly does that car fill that role?

Reuss: That car is a very sophisticated vehicle from a plug-in hybrid standpoint. Again, we're looking at direct injected fuel technology on the 3.6, which already gets you better fuel economy and more power. So you've got that intellectual technology already in the base engine.

Then you marry that with a plug-in hybrid technology, some of the battery technology we're developing again on a car like the Volt, and you marry that together, and you've got something that no one else has that fulfills, I think, a luxury market with a lot of amenities and a lot of options that the luxury car buyer would want.

But you've also got the feel-good hybrid technology around what a plug-in hybrid can deliver, and the direct injection piece of that with the engine. It's is a very unique combination of technology. We're proud of it. And by the way, it's one of the most beautiful cars I've seen.

Haig: All right. That sounds great. Thanks for talking to us today.

Reuss: Thank you, Rachel. I really appreciate the opportunity.

Haig: For Morningstar.com, I'm Rachel Haig.