GM's abandonment of its fight to regain car sales lost to Japanese automakers is the latest step in its massive restructuring. Last year, it suffered the largest loss in corporate history - $4.5 billion - and announced
plans in December to shut 21 plants and lay off 74,000 workers.
"It's very clear the country's economy is flat," Stempel told reporters after yesterday's meeting. "It's going to languish through the summer. The board simply said, 'You cannot wait for an economic recovery. You're going to have to move forward and get this corporation back in the black in North America.' "
Stempel said he believed GM could keep its 46 percent share of the North American car market - and make North American operations profitable - by rolling out new models more rapidly while cutting costs.
The company's new president, John F. Smith, said, "We think if we can run a very aggressive new-product program, market share will take care of itself."
But some auto-industry analysts took issue with GM's direction.
"That's my theory of oblivion," said Thomas O'Grady, chief executive of Integrated Automotive Resources in Wayne, Pa. "Right now, that can work for awhile because the Japanese are taking it easy," he said, referring to the drop in Japanese car sales in the United States.
O'Grady said GM, which has lost 10 points of market share in the last decade, is vulnerable to attacks from Ford Motor Co. and Chrysler Corp.
GM's North American operations lost $7 billion last year. They continued to bleed red ink - an estimated $1 billion - in the first quarter. GM's electronics, defense and financing subsidiaries were responsible for the firm's $179 million profit, its first since mid-1990.
Stempel said the increased emphasis on profitability resulted from a surprise April 6 GM board shake-up in which then-president Lloyd Reuss and chief financial officer Robert J. O'Connell were demoted.
GM also has announced a streamlining of its North American car and truck- manufacturing divisions, has put marketing responsibility for its five car divisions under one executive, created a worldwide purchasing organization and said it would cut from 20 to seven the number of frames, or "platforms," on which its cars are based.
Stempel said GM would continue to reduce the number of its car models. The company currently offers 60 models of cars and trucks, down from 84 in 1987, spokesman Terry Sullivan said.
Also at the meeting, Stempel fielded at least a dozen questions from irate shareholders about an alleged multimillion-dollar fraud scheme by Long Island, N.Y., Buick-Pontiac dealer John McNamara. He was charged last month with borrowing more than $1 billion on false pretenses from General Motors Acceptance Corp. and pocketing $436 million of it.
He agreed to forfeit $400 million to settle his debts but still faces
criminal charges. GM took a $171 million write-off in the fourth quarter in connection with the alleged scheme.
"It happened, we are embarrassed and it will not happen again," Stempel said. He said management would discipline any GMAC employees it finds who should have discovered the scam.