GM should emerge from pandemic with permanently lower costs: CEO

DETROIT (Reuters) – General Motors Co should emerge from the coronavirus pandemic with a permanently reduced cost base after it scrambled to reduce its cash burn to withstand a two-month shutdown in North American production as part of efforts to halt the spread of COVID-19, its top executive said on Tuesday.

“We were quickly able to take out significant costs and we are being very conservative about what costs we turn back on,” Chief Executive Officer Mary Barra said during an investor event with Credit Suisse. “I believe we will come out of this with a lower cost structure that is permanent.”

Barra said those permanent cost reductions could included few different vehicle platforms offered by the No. 1 U.S automaker and reducing the complexity of those platforms to be more focused on producing the versions consumers want most.

She said that the pandemic had given GM the opportunity to go through all of its line item expenses and eliminate redundant processes.

“We’ve found things that we don’t need to do and things we can do more efficiently,” Barra said.

The U.S. automotive industry has been ramping up after the coronavirus shutdown, and major automakers have been keeping a close eye on suppliers in Mexico to see the pandemic disrupts the flow of parts.

Barra said on Tuesday if there are problems in GM’s supply chain, the automaker will focus on diverting parts for its popular, highly-profitable pickup trucks.

(Reporting By Nick Carey; Editing by Marguerita Choy)