Page 69 - The Economist Asia January 2018

Business The Economist January 27th 2018 53
Also in this section
54 Qualcomm’s next fine
55 Social media and misinformation
55 Luxury goods go online
56 America’s avocado dearth
57 Mandatory arbitration in America
58 Schumpeter: GE’s foggy finances

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The car industry generated by the Silverado and a range of
General Uber-Motors new pickups will help pay for big invest-
mentsin EVsand AVs. Itdoesnothurt GM’s
case that Ford, its main rival in Detroit, is
struggling (see chart). Jim Hackett, a new
boss brought in because of his technology
know-how, oversaw a lacklustre relaunch
in October that was sketchy on Ford’s vi-
DETROIT sion forthe future oftransportservices. On
The carmakertakes an unexpected lead in the race to develop autonomous vehicles
January 24th the firm reported disappoint-
ENERAL MOTORS reveals barn-sized April 2017 GM’s market value was over- ing quarterly results, dashing hopes for
GtruckatDetroitmotorshow. What else hauled by Tesla’s, a firm that makes just quickimprovement.
is new, you might now ask. But the launch tensofthousandsofflashyEVsa year, com- In contrast, GM is already well on the
on January 20th of the Chevrolet Silve- pared with the millions of vehicles rolling way to reshaping itself. For starters, it has
rado, a pickup that will go on sale at the offGM’s production lines. diverted resources to where it is a market
end of the year, highlights a surprising tur- Sentiment has changed dramatically. leader. It has got rid of unprofitable busi-
naround forAmerica’s largest carmaker. Since April GM’s share price has surged by nesses around the world, a process that
The good news is not just the Silve- 28%, giving the firm back the lead. By con- culminated in a decision last March to sell
rado’s outsized margins, which are impor- trast, Tesla hasstruggled with the nuts-and- Opel, its loss-making European carmaker,
tantfora firm thatreliesheavilyon trucks— bolts of carmaking. Production-line pro- to France’s PSA. At the same time, GM has
after Mary Barra, GM’s boss, gave an ebul- blems have hampered a big roll out of its invested heavily in new pickups, such as
lient performance at an investors’ mass-marketModel 3. AnalystsatBarclays, the Silverado.
conference that coincided with the motor a bank, say that GM is more “evolving Cadillac, GM’s premium brand, may
show, the release of GM’s quarterly results mammal than…dyingdinosaur”. look like an exception to this happy rule.
on February6th are likelyto include record One reason for the reversal of fortunes Sales of just 350,000 cars in 2017 puts it far
profits. It is also that the money thrown off is that GM has convinced investors that its behind its German rivals. Yet sales have
by vehicles such as the Silverado will help current business is in fine fettle. The cash doubled since 2010 and it has grown faster
the firm navigate the tricky terrain that lies than any ofthem in recent years. Although
ahead ofall the world’s bigcarmakers. the firm does not disclose the information,
One task is to ensure that their current Self-driving analysts at Morgan Stanley reckon that
business of selling vehicles with internal- Share prices, January 1st 2017=100 Cadillac could be worth $13bn, around
combustion engines stays healthy. At the 20% of GM’s current value. Johan de Nyss-
same time, they must prepare for a future General Motors 140 chen, Cadillac’s boss, admits he runs a
of electric and autonomous cars (EVsand 130 “challenger brand”, but sniffs an opportu-
AVs), which threaten to up-end business 120 nity. The upheaval created as carmakers
models that have endured fora century. grapple with new business models means
Not so long ago, GM and its peers 110 that “everyone has to start again”.
seemed to be on a path to extinction. Tech- 100 The most important reason for GM’s
nology firms such as Alphabet, Uber and Ford Motor comeback, though, is its success in con-
other pushy newcomers had started a race 90 vincing investors that it is a leader not just
to develop software that would control 80 among established carmakers, but among
J
driverlesscarsand to offerride-hailing and J F MAM 2017 J A S O N D J tech firms, too. It has rapidly accelerated
18
ride-sharing services that are expected to Source: Thomson Reuters from the position ofan also-ran in the field
thrive at the expense of car ownership. In of autonomous vehicles to apparent 1