Carmaker_s officials seek new income, cheaper operations.
Published:
26 November 1999 y., Friday
After waging a decade-long campaign to cut costs in its assembly plants and parts factories, General Motors Corp. has shifted its attention to a new money-saving effort. The automaker wants to use the Internet to cut the cost of buying parts and of selling and delivering vehicles. An array of new electronic ventures have appeared this year, each intended to cut white-collar costs and consequently lift profits and GM_s lackluster stock price. Putting the emphasis on reducing white-collar expenses represents a significant change afoot at GM, whose cost-cutting senior executives had made factory cost reductions a pillar of corporate strategy since 1992. After losing almost $10 billion in the early 1990s, GM set out to slash its production expenses. The strategy saved cash. Last year, GM sold 8.1 million autos worldwide, a million more vehicles than in 1992, and produced them for about $118 billion, not much more than it spent on 1992_s output. «The big future challenge is going to be the role e-business and e-commerce has over the whole commercial end of our business,» said Ronald Zarrella, the executive vice president in charge of GM_s North American operations. «We_ve got to be positioned as a company to leverage that and take advantage of it.» A sign investors have overlooked the automaker_s turn of direction appears in the stock price. Closing at $73 a share Tuesday, unchanged from Monday, GM_s stock price has hardly been skyrocketing this fall. But automotive analysts suggest the new ventures could pare hundreds of millions of dollars in costs and generate at least $1 billion in income.
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