Let's take Chris Liddell at his word about why he's leaving General Motors after just 15 months on the job as chief financial officer.
But then let's watch closely how the new CFO, 38-year-old Dan Ammann, deals with mounting concern that GM has relaxed its financial discipline recently by reverting to the old habit of splurging on rebates and cut-rate leases to peddle its cars and trucks.
Liddell rattled off a list of major accomplishments Thursday during his short stint in Detroit:
• Four straight profitable quarters in a weak 2010 auto market.
• Slashing GM's debt from $15.8 billion to $4.6 billion.
• Launching a successful public offering of GM stock last November.
• Removing the stain of so-called material weakness in GM's
financial record-keeping.
Not bad for a year's work. And while Liddell always said the primary attraction of joining GM was to help rebuild an iconic global company, it was also assumed that he'd like to run the joint someday as CEO.
When Ed Whitacre stepped aside as CEO last August, though, the GM board chose Dan Akerson to replace him. So once Liddell checked off the IPO and a few other things from his near-term to-do list -- and realized Akerson would be CEO for another two or three years -- he decided to move on.
Incentives at issue
Despite the good stuff that happened on Liddell's watch as CFO, Ammann takes over at a precarious time.
GM's stock price is slipping, as fuel prices rise and competitors and some industry analysts question the wisdom of GM's aggressive use of incentives to boost sales and market share.
While rebates and cut-rate financing have long been part of the auto industry marketing mix, GM, Ford and Chrysler relied much more heavily than their foreign-owned competitors did on such fire-sale tactics in the years leading up to the financial crisis in 2008. The result was lower profit margins and tarnished brands.
After the GM and Chrysler bankruptcies in 2009, the Detroit Three curtailed incentives. Profits improved, pushing Ford stock up from its early-2009 lows and helping GM launch its IPO at $33 per share.
But suddenly, just as GM convinced investors its fiscal house was in order and launched the IPO, it cranked up incentives.
In November, GM spent close to the industry average on incentives -- but by February, incentives were exceeding $3,800 per vehicle, more than $1,000 above the average of GM's competitors.
The aggressive tactics boosted GM's U.S. market share from 19.3% in November to 20.8% in February. "But the question is, at what cost?" asked Jessica Caldwell, senior analyst for Edmunds.com.
Competitors squealed and Wall Street analysts fretted about whether GM might be crimping its own profits -- and those of the whole industry.
Part of a CFO's job is to keep pricing at profitable levels even as the zealous sales staff tries to reel in every buyer. The whole industry will be watching as Ammann steps into his new gig.
But then let's watch closely how the new CFO, 38-year-old Dan Ammann, deals with mounting concern that GM has relaxed its financial discipline recently by reverting to the old habit of splurging on rebates and cut-rate leases to peddle its cars and trucks.
Liddell rattled off a list of major accomplishments Thursday during his short stint in Detroit:
• Four straight profitable quarters in a weak 2010 auto market.
• Slashing GM's debt from $15.8 billion to $4.6 billion.
• Launching a successful public offering of GM stock last November.
• Removing the stain of so-called material weakness in GM's
financial record-keeping.
Not bad for a year's work. And while Liddell always said the primary attraction of joining GM was to help rebuild an iconic global company, it was also assumed that he'd like to run the joint someday as CEO.
When Ed Whitacre stepped aside as CEO last August, though, the GM board chose Dan Akerson to replace him. So once Liddell checked off the IPO and a few other things from his near-term to-do list -- and realized Akerson would be CEO for another two or three years -- he decided to move on.
Incentives at issue
Despite the good stuff that happened on Liddell's watch as CFO, Ammann takes over at a precarious time.
GM's stock price is slipping, as fuel prices rise and competitors and some industry analysts question the wisdom of GM's aggressive use of incentives to boost sales and market share.
While rebates and cut-rate financing have long been part of the auto industry marketing mix, GM, Ford and Chrysler relied much more heavily than their foreign-owned competitors did on such fire-sale tactics in the years leading up to the financial crisis in 2008. The result was lower profit margins and tarnished brands.
After the GM and Chrysler bankruptcies in 2009, the Detroit Three curtailed incentives. Profits improved, pushing Ford stock up from its early-2009 lows and helping GM launch its IPO at $33 per share.
But suddenly, just as GM convinced investors its fiscal house was in order and launched the IPO, it cranked up incentives.
In November, GM spent close to the industry average on incentives -- but by February, incentives were exceeding $3,800 per vehicle, more than $1,000 above the average of GM's competitors.
The aggressive tactics boosted GM's U.S. market share from 19.3% in November to 20.8% in February. "But the question is, at what cost?" asked Jessica Caldwell, senior analyst for Edmunds.com.
Competitors squealed and Wall Street analysts fretted about whether GM might be crimping its own profits -- and those of the whole industry.
Part of a CFO's job is to keep pricing at profitable levels even as the zealous sales staff tries to reel in every buyer. The whole industry will be watching as Ammann steps into his new gig.
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