BUSINESS

Q&A: ARTURO ELIAS, GM CANADA

On eco-friendly cars, Toyota, and recovering from a ‘terrible’ year

STEVE MAICH March 5 2007
BUSINESS

Q&A: ARTURO ELIAS, GM CANADA

On eco-friendly cars, Toyota, and recovering from a ‘terrible’ year

STEVE MAICH March 5 2007

Q&A: ARTURO ELIAS, GM CANADA

BUSINESS

On eco-friendly cars, Toyota, and recovering from a ‘terrible’ year

STEVE MAICH

BY STEVE MAICH • Arturo Elias, the new head of General Motors Canada, knows all about the ups and downs of the car business. A 29-year GM veteran, he has worked in executive positions on three continents, and has come to Canada in the midst of what is perhaps the biggest turnaround the company has ever attempted. He spoke with Maclean’s in January, just after the Detroit Auto Show.

Q: It must have been gratifying to see the response GM received in Detroit.

A: When the Camaro came out people got up. I mean, it was like a standing ovation, and everybody had their cellphones and were taking pictures. It looked almost like a rock concert. I couldn’t hear anything. So that kicked it off, it was kind of a nice thing. Then the day after, we were notified that we had won the North American truck and car with the [Chevy] Silverado and the [Saturn] Aura. Then it was the [Chevy Volt concept] announcement. It’s potentially a very important product for us if we can get it on the market here soon.

Q: What do Mr. and Mrs. Canada or America want in a car?

A: We think people are looking for basically three things. I think people are looking for product excellence, just a good car; two, a car that has technologies, and increasingly technologies that are related to fuel efficiency and the environment; and then three, I think people are looking for value, not necessarily dirt cheap—that’s not what value means to customers. What value means to a customer is a vehicle that is fairly priced, that has good technology features on it, that has a good warranty coverage.

Q: You mention the e?iviro?iment. How are you handling those issues?

A: Let me give you an example. Our fullsized pickups, for example, all have active fuel management. I mean, that improves our fuel economy by 12 per cent. And if you think about, for example, smog emissions, you pollute more by painting a room with four litres of water-based paint than driving one of our full-sized SUVs from Toronto to Vancouver

and back, and so technology has improved a lot. You know, at the end of the day our view is that not one single energy source will be dominant. Today obviously it’s petroleum, but I think there are competing energy sources. Electricity certainly is one of them, obviously gasoline, diesels, hybrids, vehicles running on E85, and hydrogen fuel cells. So I think the key is going to be energy diversity. We are working on all of those fronts.

Q: With the strong Canadian dollar there’s still a lot of concern about Canada’s competitive position. How does our auto industry stack up?

A: I think in the medium term, you’re going

Not one single energy source will be dominant. I think the key will be energy diversity.

to have to continue to get better on the productivity side and your efficiencies, and we’re working very closely with our labour partners on that. If the question is, “Can Canada build a $6,000 to $7,000 car, ship it to some emerging country and be competitive?”, probably not, but I think that given the products that we have, we’re in fairly good shape.

Q: How much ofthat is dependent on the dollar staying roughly where it is?

A: Well, at some point if a currency appreciates to a point beyond at which nobody is competitive... I don’t, certainly, believe we’re there, but the Canadian dollar has appreciated 30 to 40 per cent in the last several years, and we can’t take cost out at that rate of currency appreciation. I would like to think that we won’t see a replica of what we just saw in the last several years because that would clearly be very difficult for us to absorb, it would make us very uncompetitive.

Q: Toyota has come out with a new Tundra truck, and it seems they’re going straight after the Silverado, they’re going straight after the Ford ISO, they’re going straight after you.

A: We’ll see. We will see. I can only tell you that I have driven our Silverado, and I can tell you Silverado and Sierra are world-class products, and I suspect some other folks saw it the same way, otherwise we wouldn’t have got the truck of the year. But we’ll see. I’ll just say that my feeling is that we are not going to see a very significant impact. I think we have a winner in our Silverado. We make them right here in Oshawa, so I just take a stroll into the plant and see the type of quality and technology that are built into those vehicles, segment-leading fuel economy... you know? We’ll see.

Q: GM’s taken a lot of bad press—equity analysts advising clients to stay away from the stock—and I wanted to ask you why are people wrong to write this company off?

A: Well, look. We had a terrible 2005—I don’t know how else you can say it when you lose the kind of money we lost in 2005—and we made a very conscious decision that we were not going to stop on it, despite our financial situation, on the product side, and I think you’re starting to see the results. Last year was a year of transition for us. I keep reminding people that in 2006 there were more buyers than sellers of GM stock. That’s why the stock went up. And I think 2007 is a year where we want to take that turnaround and convert it into leadership—leadership in product excellence, leadership in technology. We need to convert all that good news, all that good aura that we sensed in Detroit, and start selling some cars, and I think we have the products to do that. M