DETROIT--General Motors Co Chief Executive Mary Barra says often that the auto industry will change more during the next decade than it has in the past half-century, as she highlights how GM will keep up.
In 2016, it has invested nearly $1 billion to buy a self-driving car technology startup, Cruise Automation; invested $500 million into ride services company Lyft; launched a new car-sharing brand, Maven, and a new electric car, the Chevrolet Bolt. The automaker is also expanding the array of services available via the high-speed mobile internet connections embedded in millions of GM vehicles.
None of those high-profile moves, however, are likely to have much near-term impact on the No. 1 U.S. automaker's bottom line. For now and for years to come, GM will make money the way it did 60 years ago: By selling large vehicles built on steel frames, with V8 engines driving the rear wheels. In 1957, that technology was sold as a Chevy Bel Air. Today, it is packaged as a Chevrolet Silverado pickup truck or a Cadillac Escalade SUV.
The company makes more than 90 percent of its profits, before interest and taxes, in its North American auto operations. The bulk of those profits come from sales of trucks and SUVs, analysts and company executives said.
"That business model has worked and continues to work," GM President Dan Ammann told Reuters. "We believe that model will keep going, particularly in places where we are strongest, for a long time."
GM is pursuing a two-pronged strategy, aimed at the increasingly divergent segments of its home market. In big cities along the coasts, GM is widening its efforts to capture urban consumers who are shifting away from traditional vehicle ownership and some day may get around by summoning self-driving cars with a smartphone. "We're at the very infancy of that," Ammann said.
Ride sharing today accounts for less than 1 percent of all miles traveled in the United States. But if buying rides by the mile takes off, it could be a "significant" opportunity, he said. Earlier this week, GM's Cadillac luxury division launched in New York what it said was the industry's first service allowing customers to pay a monthly fee to drive any of the brand's models.
GM has a different plan for the heartland - the red states that backed Donald Trump for president, where trucks and SUVs sell by the hundreds of thousands and electric cars sell by the hundreds - or less. GM is investing billions in U.S. factories to expand production of large trucks and SUVs.
Defending the V8 truck franchise is critical to GM. More than 90 percent of GM's pickup trucks are sold with V8 engines, said Dan Nicholson, head of the company's propulsion systems engineering operations.
As of now, he said, GM does not have a V8 that can comply with the 2025 emissions standards - put in place by the outgoing Obama administration - without turning off customers who like the trucks as they are. The Alliance for Automobile Manufacturers, which includes GM, is lobbying the incoming Trump administration to revise those standards.
GM is meanwhile working on improving the fuel efficiency of its V8 engines, Nicholson said, but current fuel economy rules could force the company to limit availability and raise the price of trucks equipped with the larger engines.
Rival Ford Motor Co, with its F-150 pickup, has already made the transition to V6 turbo engines - which now sell in larger volumes than its V8 trucks - along with aluminum body panels that reduce weight and boost fuel economy.
