New beginning: A smaller, leaner GM

DETROIT -- General Motors' marriage to the U.S. government was sealed Friday, and although the assets being sold out of bankruptcy court will create a "New GM," a lot will stay the same.

It will have the same headquarters and many of the same top executives. GM's logo remains a blue square with silver letters — although a change to green is on the table, to reflect a new environmental focus.

"Today marks the beginning of what will be a new company, a New GM, dedicated to building the very best cars and trucks, highly fuel-efficient, world-class quality, green technology development, and with truly outstanding design," CEO Frederick "Fritz" Henderson said as GM filed for Chapter 11 June 1. And he was the CEO at the podium Friday for the New GM.

The company will hold the best assets of Old GM. The orphans (from closed plants to a golf course) stay in bankruptcy court for liquidation. A judge's order blessing the split took effect Thursday with no appeals headed to stop it.

New GM goes forward with fewer brands and government owners full of opinions, but also no debts and a vow to make money on every vehicle. Industry watchers call it GM's best — and only — chance to become profitable or fail for good.

GM's debt "was like a noose around its neck," says David Cole, chairman of the Center for Automotive Research. "It's going to be easier for them to put a lot more into their cars and trucks than before."

"Its debt load is gone, and a lot of costs are going to be drastically reduced," says Jim Hall of 2953 Analytics. "That's the basis of making a company profitable."

Critics say New GM's biggest task will be remaking its bureaucratic culture to move faster and be more innovative. Others say a lot of that work has been done.

All agree they must get people to forget a numbing nine months of bad news and start buying their cars again.

Here's USA TODAY's look at some of the things that will be different about the New GM — and some that will remain the same:

Leadership

Different: Most of the board

GM starts off as a new company with at least seven new faces among the 13 directors. The new chairman of the board will be former AT&T CEO Ed Whitacre, who was successful at turning one of the smallest regional Bells into a telecom giant. Stephen Girsky, a longtime auto analyst, has been chosen by the United Auto Workers union to sit on the board. Five remain to be named.

They replace six directors who will resign and restructuring expert Kent Kresa, acting chairman since March. Kresa will remain with the Old GM in bankruptcy court and oversee the liquidation of those assets.

Same: Some board members, most top lieutenants

Six old board members will make the transition to the new board, and most of New GM's top staff have been with Old GM for decades. That includes Henderson, a Detroit native who joined GM in 1984 as a financial analyst. Top jobs also filled by incumbents, at least for now: the chief financial officer; the head of sales, service and marketing; and the heads of manufacturing and labor relations.

Although many of the faces are the same, some argue they were leading a revolution in Old GM to get people to work faster with less bureaucracy and develop products in tune with what consumers really want. That, too, would carry forward to the new company — and should.

Bob Lutz started the process in 2001 when he joined GM as product czar, Cole says. Lutz put product designers back in charge of creating vehicles, rather than having final decisions made by the finance side. He put focus on design and interior quality, and the vehicles have shown steady improvement in independent studies since, Cole says.

"The old culture has been dead for a long time; that's one of the things Bob Lutz was pursuing with a vengeance," Cole says. "The speed of product development and the things they have been doing show it's a very, very different company than it was a few years ago."

Lutz, 77, was to retire at the end of this year, but now will stay on in a role to be revealed Friday, said a source who knows of the plan, but would not be identified because he was not authorized to speak before the announcement. Henderson says GM will have far fewer managers in the future, however, and many are gone already.

"People have been rolling out of the company, and they haven't been replaced," says Hall, of 2953 Analytics. But as tempting as it may be to stock New GM with new blood, Hall says they need to rely on the folks they have. "They need people who know the business. It's not time to bring in someone that has to learn the car business. The market will not tolerate that. If you were in a relatively healthy market, you might have time. But not now."

Vehicles

Different: Slimmer, but more impressive lineup of cars and trucks

GM's new products hitting the market this year, such as the 2010 Chevy Camaro, were under development several years by Old GM. Even new models in the next two or three years, like the Chevy Volt and Cruze, began development under Old GM. So for some time to come, GM cars and trucks will not be solely products of New GM.

But New GM will have far fewer vehicles in its lineup as it finishes shedding the Saturn, Hummer, Saab and Pontiac brands. It will be able to put more muscle into the quality and marketing of its slimmer lineup of current and new products. The existing Chevy Malibu and Cadillac CTS and new 2010 Chevy Equinox and BuickLaCrosse are all getting good reviews from critics.

"They have some outstanding products, some of the best products in the industry," says Peter De Lorenzo, editor of AutoExtremist.com. "People just don't know."

Same: Relying on trucks, muscle cars

GM has been criticized for failing to project that gas prices would go up, and relying too heavily on trucks and SUVs for profits. Although that is changing, for now New GM will have to rely heavily on muscle cars, like the Camaro, and crossovers —car-based SUVs, which get better fuel economy but are still large and not as fuel efficient as smaller cars.

Although the Camaro gets good fuel economy — the V-6 is rated at 29 miles per gallon on the highway vs. the rival Ford Mustang's 26 mpg — it's not the first car that leaps to mind when you think fuel economy.

GM's greatest promise for fuel efficiency is the electric Volt, due on the market in small numbers at the end of 2010. But saddled with expensive batteries, it is likely to be a money loser until new, cheaper technology and batteries come along.

Until then, GM still will rely for much of its profitability on crossovers and trucks.

"That's just the way it is," Hall says. "Those vehicles are intrinsically more profitable than passenger cars. But GM understands now that the object is to make the small cars desirable, and people will spend more money on them."

Perceptions

Different: New image problems

Since October, GM has battled a mind-numbing drumbeat of negative headline after negative headline. The American public watched former CEO Rick Wagoner in front of Congress, struggling to explain why he flew to Washington on a private jet to ask for government aid. The company's product decisions, business strategies and bankruptcy filing have been news (and comedy) show fodder.

And polls have found some people say they won't buy a car from an automaker that's taken bailout money.

But Hall thinks that issue will ease. For every person who's made that claim, he says, there's someone else who's becoming more willing to give GM and domestic carmakers another chance.

"We have a diverse country," Hall says. "For some customers, the bailout matters. For other customers, it doesn't."

Same: Old image problems

Even before GM hit its financial wall, its market share was dropping. Executives long complained that there was a "perception gap" between the actual quality of the cars it was producing, and how the American public perceived its brands.

That problem hasn't gone away.

This is the only chance GM will get to try to remake its image, De Lorenzo says. To do that, he says, it needs marketing campaigns that focus on the individual brands and less on the company. And they can't do it with standard advertising that hypes a car's attributes, he says. The campaigns need to be more like recent Hummer advertising schemes that built up the image of the brand with witty, trendy commercials.

"Hummer advertising was a high-water mark for GM," even though it couldn't save the brand, De Lorenzo says. "They need that kind of impactful campaign for the four brands they have left."

The company can't wait around for consumer perception of the brands' quality to catch up with the actual quality, he says.

"They don't have that kind of time. They are going to have to leapfrog ahead of it and basically hammer the point home … or blow up (their image) completely and start over somehow."