real investment in care in the topic that you'll be telling us about. be sure to be interested in what you're telling us. if you're not interested in what you're presenting, chances are we probably won't be either. >> one tiebreaker for me a lot last year was that requirement on using c-span video. i'm looking for videos where people have looked at the c-span content and said what elements of c-span video make the most sense for telling the compelling story i'm trying to tell. >> for all the rules including deadline, prize information, and how to upload your video, go to studentcam.org. >> a month ago the federal government sold off part of its stake in automaker general motors. the ceo of gm came to the washington economic club to talk about how his company is faring. this is an hour. >> i had a thought when david was speaking and i want you to remember this when i meet my

ultimate reward, invite david to the funeral. [laughter] >> this is really a pleasure and an honor to be here today. it's hard to be unemotional today. there's so many of my friends here and i have deep ties into this community having served in various positions at mci, which was the -- at the fountainhead of the technology challenges here at worldwide. my friends from nextel. we had a mini american express board meeting with ted and vernon earlier. steve and jean from aol and all the folks from aol. i was on the board at aol and time warner for many years. and, of course, the carlyle group which is -- which is great and my personal friends.

i play squash with them routinely and i might add routinely beat. [laughter] >> and, of course, my college roommate is here, jim perry, who is a dear friend of -- he knew me when i had hair. and which even my wife can't say. [laughter] >> and jim and i roomed for three-and-a-half years at the united states state academies and, of course, my wife who i couldn't have embarked on this adventure without her. how many veterans are there in the group? would you raise your hands. thank you for your service. [applause] >> and thank you, david for the kind introduction. it's great to be here. i flew in last night and, yes, i did fly commercial. [laughter] >> i'm not that dumb.

[laughter] >> i did the whole airport thing. i actually chose the enhanced patdown of the entire body. and i told the tsa agent take your best shot, big guy, i've been through it. [laughter] >> the road show was an experience on many different levels. but it was worth it. 18 months ago gm was pretty much flat on its back. in june for '09 we filed for bankruptcy protection. that's kind of old news now. but if you would, just think about it for a moment. general motors the icon of american manufacturing. one time the holder of 50% of the u.s. vehicle market. standard bearer of what was termed the modern corporation. and it went bankrupt. it was unimaginable until it

actually happened. 39 days, 39 days later, thanks to help from the u.s. taxpayer and others, gm was relaunched. critics gave us very little chance of success. many thought we would remain on the public dole for decades. others simply left us for dead. but 16 months later, after emerging from bankruptcy, this new gm was relaunched and one of the most if not the most successful initial public offering ever. i spent many decades in business, most recently in private equity. it was my job in a sense to assess companies, their jobs, their prospects, their managements and essentially make bets on their futures.

i can promise you that two years ago, there was precious few in this country that gave gm a chance or willing to bet on its future. but three weeks ago, people by the hundreds of thousands did just that. they bet off general motors. they saw a company with a new business model, focused on solely three things, designing, building, and selling the world's best vehicles. they saw a new company with a competitive cost structure, improved capacity utilization, leaner inventories, improved brand equity and customers willing to pay higher prices for great vehicles. all of which result in improved earnings and great cash flow. they saw an automotive company competing in a growth business. hard to imagine not too many

years ago. one that was better positioned then any other company in the world in the emerging markets of india, china and brazil. they saw a new company with a strong balance sheet and plans to make it even stronger. they saw a new company positioned to break even at the bottom of the market. actually '09 automotive was at a 50-year low and we were at the top. and they would only make money at the high end of the cycle. if we achieve a midcycle correction in the next year, gm is very well positioned to move forward. the new investors saw a company being managed by a mix of new

talent that was intent on change. and a team of highly skilled insiders who are running key operations around the world. and most importantly, they saw great new products in the marketplace like the cadillac srx, which took nine market share points in one year. buick lacrosse, luke is the fastest selling brand in america in the past 12 months. the gm terrain and the chevy cruise which is -- in 80 countries we introduce it too. in one or two in each of the countries it's currently manufactured in, is the first really strong ecosubcompact that we've produced in this country. they also saw a company that today with four brands is selling more than it did a year ago with eight brands. and finally, they saw a lot of

people beginning to believe in the new gm. a company that has learned from its past and is committed and determined not to make the mistakes of the past. at gm, we're building a culture that values speed, agility, and competitive physicals in. -- competitiveness and it will continuously adapt its business model to the rapidly changing world that puts the customer first. this may not seem revolutionary to you but trust me, it is. [laughter] >> what does this mean? it means that we're working hard to set the pace with new cars like the chevy cruise. the cruise was recently named 2001 urban car of the year. by decisive media. it's in a -- it's a segment leader. it features things that we're going to start to differentiate

on, ten air bags. its competition has 8. we have onstar. we intend to make onstar in every car on the road essentially a network node. you'll see dramatic changes in the internet application automotive and automotive safety. it means we're bringing customers -- the newest design in technology like volt, the extended range electric vehiclee road today. none. by the way, there will be for of them upstairs for you to see and to drive, it's only $24 for a trip around the block. we're trying to raise more revenue at every opportunity. [laughter] >> this car will go 50 miles on a single charge and then it

converts to a generator, an 86 horsepower combustion engine, and it will go another 300 miles you can literally drive this car from washington, d.c. to los angeles. not to say that we won't develop other cars like the leaf. those are battery electric cars. we think they have a place in the marketplace but we think they'll be more of a metro car. yes, steve, we'll sell them unless you would like to have some. from the start the volt was designed to change the way that we think about the automobile and i think we've made a strong statement in that area. just in 2011, the accolades have been many and wide. car of the year award by automobile magazine, motor trend. i might also note we were also named to have the truck of the year. that's very rare for an automotive company to have both

car and truck of the year by motor trend. the volt was named car of the year of green cartern and from car and driver and popular mechanics. we're confident that the volt will be one of the most important cars that gm has ever produced. in fact, when i think back over many people's lives in this room, the iconic car might have been described as the '64, '65 mustang. i think in 2020 and 2030 i hope my children will reflect back that the volt was the iconic car of their generation. you might also -- i might also note that one of the launch markets for the volt will be washington, d.c. there are seven. we intend to start shipping volts next week for commercial. -- commercial purchases. the volt also is a statement that we are thinking globally as well as acting in what we

believe to be society's best interest. last month we announced that chevrolet will invest $40 million over the next few years for various clean energy projects throughout america. why $40 million? these projects are designed to reduce about 8 million metric tons of carbon dioxide emissions in the united states. that's roughly the carbon inprint or footprints emitted from all chevrolets between now and the end of '11 and we wanted to make a strong statement that we're just not out for a fast buck or to sell cars but we want to be a responsible member of our society. this is a big and important goal and one we're committed to achieve. we think it's the right thing to do for our customers. our company. and for the communities that we live in. it's all part of gm's commitment to the environment and to a clean energy future.

to be fair, and i appreciate all your kind words, david, this is not the result of me. i'm a member of the team. many of these projects were started well before the bankruptcy and i think we have to get to give due credit and gratitude to the people that had the foresight at general motors to develop these great cars and trucks that are not winning so many awards. and i think it is testimony to the tenacity and the persistence and the focus of the gm employees to look through the dark days of the bankruptcy, the days leading up to the bankruptcy, and kept focused to deliver great products. there was a lot of turmoil of the company around the industry and it was most impressive and it's the source of inspiration to me and it's the privilege if anything to leave a great team of people that are so committed

to doing what's right for their company, and in a sense for their country. in many ways what it comes down in the future to get people like you -- and i view everyone in this room as a potential gm customer. that's why i'm here today. [laughter] >> but we have to rebuild the trust in the general motors product line. and it took many years of really not listening to our customer base and arguably poor quality to destroy which once was a great image. well, i'll tell you today that our quality is second to none. there's no foreign transplant, there's no foreign competitor that produces cars any better than we do. these are world class cars. that's been verified not only from internal but external metrics but i'm proud to be a team leader of a great company with great products.

and i hope you will reconsider or consider your next purchase. four which of will be upstairs following the meeting. [laughter] >> gm is a company and as we went through the ipo and we knew we were going to have a special offering, everything from the press release and i hope you saw in our public statements that the humility we wanted to project. we survived a near death experience. and we deeply appreciate the support we got from the american people on a state and federal level. and we will not forgot that. -- forget that. for the first time in a generation, and i am not kidding, this was of a company that had many structural cost problems. the list goes on and on. it's all been rectified.

in fact, for the first time we have a level playing field so as we said in one of our earlier lines, advertising lines, may the best car win. and if that's the metric by which we are measured, i am confident of our future. so we look forward to reearning the public's trust and respect every day. we look forward to a bright future. and with that, david, i'd like to turn it back to you 'cause i know you want to ask me a lot of questions. [laughter] [applause] >> so i understand you drove over in a volt today, so just between us, what was it like? >> ecstasy. [laughter] >> yeah.

it's interesting, i've only had my life threatened twice so far so i actually have security now, which is something new for me. i always felt secure with you, david. >> right. >> i had -- he drove the car 'cause usually i drive in a suv. but i wanted to drive the car here in case anybody wanted us to take us up in a $25 around the block. but he was impressed. i mean, this guy drives professionally. it's tight. i mean, it's just not the propulsionship what does it look like. i know i'm going to offend you toyota, but we refer the geek mobile in a prius. wrote be caught dead in a prius. this actually looks good and i've driven it 500 miles. my wife is here. she will attest to it. we've used 1.2 gallons of gas. >> really.

>> and 80% of the people in america drive 40 miles or less per day. 40 miles less per day so you should be able to drive the -- 80% of us should be able to drive without ever -- like if i work in a car lot, 10 miles from home -- >> it's going to be for sale as of what, two weeks frow? >> we already got 200,000 orders so -- no, a lot of people when they show up may not want to fork up that much money. there's a lot of things with that volt and there aren't going to be that many available this year, probably 20, 25,000 actually. we liquid cooled the battery pack. the battery pack weighs 400 pounds and many of the battery electric vehicles will be air cooled and we are forefront in the -- we spent $7 billion a year in research and development. we were a true repository of technology. putting another $7 billion in engineering.

and the air-cooled battery pack is estimated to last 3 to 5 years. that's a $15,000 replacement cost. so we've guaranteed the battery pack on the volt for eight years or 100,000 miles. so we know the residual this car will be good. at the end of three years, the total cost of a car over a three-year period. and when we can out with a battery electric that could be -- that could be a problem to residuals and something that could be factored into the economics. >> so when you are here, whenever you are on the weekends, what car are you driving? >> i'm driving the volt right now. wait till you see the new camaro coming up. i know this sounds like an advertisement. [laughter] >> the new camaro convertible. you're going to love that car, too. it's been a great seller but we're going to put a soft top in january. >> why exactly did you walk away from a lot of money --

[laughter] >> that would have helped your children and grandchildren and great grandchildren -- what was really the motivation, if you could articulate that? >> well, i know -- i was asked that question last week when we rolled out the volt by a fox reporter. i doubt they showed this on television. he was quoting you, i think you've said this in several forums. [laughter] >> in fact, i know you told larry summers because he mentioned the specific number. [laughter] >> he was staggered when i told it to him. >> are you recruiting him to -- anyway -- >> today is his last day on the job. >> i know. there's more to life than money. i wasn't put on this earth to just make money.

i can't tell you -- in my lifetime there have been iconic events, when i got married, my children, my grandchildren. when i walked on the trading floor once the deal was done, there were -- there were people -- there must have been 400 people and they stood up and they clapped. one of the traders on the floor told me when they had to delist general motors he cried. and when they relisted general motors he cried. and when i went back to detroit, there were -- there was an employee meeting of 2,000 people. and there was a man my age. and he cried. and he said, 18 months ago i thought this company was gone. my house was gone. so it's hard to describe -- and those experiences, no offense to carlisle, as wonderful place. it's a wonderful -- it's great people but i know i made the

right decision because this company, quite frankly, is too important to fail. the american industrial infrastructure is too important to let go down. and i will tell you the implications here -- and i'll leave it to other people to argue about it, had general motors gone down -- we spent $80 billion a year in our supply chain. ford wasn't in that good shape two years ago and i wouldn't have said they wouldn't have gone down but if our supply chain would have gone down, i think it would have caused a huge interruption of other people and i don't know what the cost of another million people out of work in this country, but a lot of people have projected my opinion. so sometimes you have to do what has to be done. and i'm not that special but

someone had to stand up. >> well, dan, when you did the ipo and you went around the world, what were the impressions that you got around the world? what do you think made these stocks sell so well? when you originally were going to price it in the mid-20s. and the price of $33 so obviously it was great demand and you increased the offering size. so what were -- would you say one or two major factors that propelled the interest? >> well, the fact that we have a great contract with the union and the substance and form have a competitive cost structure here in north america. but what's really i thought intrigued and surprised me when i went on the board in '09, july of '09 was the market position. we will produce almost as many cars in china this year as we

will the united states. and we are continually gaining market share. we have a most enviable position in china. and when we talked about our plans -- for example, you all -- we all live here and believe me, if you think about this we don't as americans because we feel it's a homogenous company. when i was at mci, for example, we would not run the same ads in battalion. -- brooklyn. joan rivers doesn't sell as well as in birmingham. california is kind of a culture in its own and so is alabama and so is minnesota and so is china. we look at china in four different ways, big cities, shanghai, beijing, hong kong but if you look out in the western provinces we're going to produce a new car this year.

and it wouldn't sell in any industrial market because we've got to sell it for down in the $5,000 range. and you can imagine, for example, easy, doesn't have electric windows. you have roll windows. that's -- that would freak all of us out. it might hurt my wrist. [laughter] >> but anyway, we not only sell up-market but we're going to sell down-market. chevrolet so global brand. i looked at a chevrolet. i was out at our design and techter center. we have a new chevrolet that's coming out if you look at it looks like like a bmw this it's america and it cost half as helpful a -- half as much. and we were in the middle of the price point and we had them take all the cars and they don't know who made them and they put that

car that didn't know who was a chevrolet, bmw here and they went right down the line. this car -- there are new cars coming, new models that will, i think, stand us in very good stead. >> you paid, i guess, a total of $32 billion has been repaid to the federal government. 23 from the ipo and some early. -- some earlier. how much does the government have to get back to break even and what stock price would they have to sell the remaining shares to break even. >> they owned 61% of the company before they owned a 33%. i just happen to know these numbers. [laughter] >> so they own a third of the company so 500 million shares at about $33 a share, multiply 500 times 33 and that's what they need to get out and break -- that don't mean somewhere in the high 40s low 50s.

we sold for 33 and that's about where it is today. >> so do you give any advice to the government about when they should sell the remaining shares and does the government give you any advice about how to operate the company? >> no and no. it's a very clear and bright line. and the administration has been great about this. they don't involve themselves in the board room or the management of the operation of the company. we have had a shareholder meeting there and there was four people. the u.s. government, the canadian government, the health trust for the union and motors liquidation cooperation representing the bonds holders in measure. if they don't like what the board was doing they would remove them or parts of them. it wasn't -- it's not our business not our -- if you had a million shares and only david would have a million shares of a particular stock, if your

financial advisor -- you just said you wanted to sell, you wouldn't want the advisor saying, well, i'll tell you when you're going to sell and how much you're going to sell. it's not our role to tell the federal government anything. they're an owner and they determined how much they wanted to sell and when they want to sell it. >> but they still can determine pay salaries at general motors is that still appropriate? >> that's still true. [laughter] >> we're going on to the next question. >> well, you know, in fact, i'm visiting with a special pay master this afternoon. and not about me. i mean, we have to be competitive. and we have to be able to attract and retain great people. and we've been able to do that but i think it's largely out of a commitment which may sound strange, money isn't everything. people -- we've been able to attract pretty damn good people

and we're able to retain good people and we're starting to lose them and i think that's an issue for our owners to recognize that in their best interest we should get some relaxation. >> when you were asked to join the general motors board you remember the board before you became the ceo. one, did the government know that you were a republican? did they care? and secondly, what did you -- what impressions did you take away from the general motors company when you joined the board? what were the biggest shock you found when you joined the posterior? -- joined the board? >> did you plant this, david? well, i would describe myself -- and i say this with some pride is a coempowered republican. [applause] >> aren't many of them left, i guess. [laughter] >> well, they're at least two

and it sounds like there are more. yes, they did -- well, you have to -- i know john mccain. we happened to go to the naval academy. and i consider him a friend so i supported him, yes. i've supported democrats as well. i like to think people are right thinking not right of center but right thinking should be in our congress. and in our political community. so i don't think that made a difference to them. >> when you joined the board, what was your biggest impressions of the company when you joined, you had not been on the board before and wasn't that familiar with the company. what was the biggest surprise or shock that you had? >> on the board. >> when you joined the board. >> well, i think too often too many things were done intuitively. and where we, carlisle -- you do i thought insightful probing

financial analyses. there was one report -- a couple of us got upset when they brought up the request for it. i mean, the numbers we're talking about here are really large i mean, we do 10 and $12 billion in sales a month. our capital budgets are huge. and the development of the new ecoengine was in excess of a billion dollars and it was basically, we need it. and as -- and most of you in business would say, well, do you make it or do you buy it? can i get it from somewhere else? little known fact, how many of you drive bmw's? that great engineering? well, you'll be pleased to know that gm makes your transmission. that german engineering is made in detroit. but do you have to make everything? that was kind of anathema to the gm culture was it's the gm way.

and culturally i would say that has to change over time, the sooner the better. that it won't probably be overnight. >> your labor costs now, are they roughly the same as bmw or toyota in the united states when you produce a car now, are your labor costs roughly the same? >> yes. they are the same. >> now, some of your predecessors, have you talked with them what mistakes they might have made or what advice they would give to you and what have you done to kind of get some of the institutional memory? >> well, yes, i have. i thought they're all fine gentlemen. i was -- i don't know if i was criticized as much as it was observed i'm not a car guy. in some respects a fresh perspective and someone who has been in other industries, seen other irks.

-- issues and as you know we used to look at a lot of turn-arounds and recapitalizations but i'm not sure i was totally witless. but i think institutional knowledge is important. i still meet with a subset of the prior management on a routine basis. i want to know what others th k think. i want to know what informed auto executives, tenured auto executives think about what we're doing. some of it is more insightful for me and the more points of views i'm better able to make more decisions. so, yes, i've gone to their homes. i played jeopardy with them. not literally but from an auto perspective are.

>> today what would you say the two or three biggest challenges. what do you stay up at night worrying the most. >> i tell everybody, i worry about everything. it was funny when i was on the floor of the -- i mean, we just ran like dogs for weeks. one of the reporters told me i looked like hell, thanks. that was just before the camera went on. [laughter] >> then i saw him in detroit when we rolled out the volt and he says you look better but you don't look that great. [laughter] >> my wife told me i did, though. well, i worry about the culture. i worry about our cost position going forward. for example -- and i think management has to be -- has to have integrity. and i don't mean that we don't have integrity but, for example, i just put out a memo to all of north america there will be no salary increases this year. we are going to put a small

contingency to the side so if we see issues where we're not competitive we can address it. because the structural cost of a 2 or 3% increase after five years i've got 15% structural cost increase i can't have that in a company that's in a very cyclical industry. i mean, it's unbelievable how predictably cyclical this industry is over the last 100 years. every 5, 3, 7 years, up down, up down. and going back to the carlisle days, the great carlisle investors here -- before the great recession we actually intellectualized the industry. and in a market you look for cyclical companies and this is a cyclical companies and i don't get an opportunity to be a portfolio manager anymore. we're betting on a cyclical industry and that's why i want a

zero debt balance sheet so we can invest without canceling and getting a ratcheting in our capital programs. so we had $26 billion in debt before the bankruptcy. we have less than $4 billion in debt today. we had a $26 billion pension liability when i came in, it's $10 billion today. we have $28 billion of cash on the balance sheet and we are looking at that pension, unfunded pension liability now. but we have to have a robust fortress balance sheet. that's funny and people look at me like i'm from mars now coming from a private equity firm where we typically bought predictable cash flows, again predictable cash nose and then -- and had debt and we would pay the debt down. this is a different game. we're playing football not rugby. it's kind of the same thing but it's different. and you have to shape the business model and intellectualize the problem much more than maybe it was done

before. so if you look across this cost structure and structural costs will kill you. i want an incentive pay, variable pay for management. in the near term. and i meet with the union every four to six wheekz i know that sounds strange to some of my former business friends. i was taken -- i actually had the head of the uaw and the head of the gm vice president on the balcony at the ipo. i've invited them to board dinners. i've invited them to that employee meeting i referenced before and had them introduced. they are our business partners. i don't want a contentious relationship with the union. i want them to be the business partner. and i broached in these meetings that i have with them that they have to -- 'cause you heard a lot of noise in the public forum about, aren't you guys going to go back hard at management.

aren't you going to get every time you got in the bankruptcy? and their prosperity is tied to the company's prosperity. they happen to have a representative between me and the average employee. but i've tried to breach that. and i go to a plant a month and i'll tell you, it's like -- it's so invigorating and affirming to walk through the plant and people yelling at you, hey dan! because you can't be trusted without giving trust. and you can't have credibility 'cause the immediate response was, well, i want you guys to think about this. he says i've heard that from ceos at gm and then they go give management a 3 to 5% raise so i put it out on our website that essentially there are no increases in base pay this year. 'cause i don't think we can do that if we don't lead by example. so you have to have -- the culture issue isn't some

amorphous thing. it's about me. it's about the management team. it's about our relationship with the union, can we be trusted? i think we've got to invest -- when i talk about product, are we going to have the right products? what do we want to be? what do we want to be remembered? i got -- of course, i'm probably a little thin-skinned having worked in private equity. i'm not as tough as i used to be. [laughter] >> i know some of you out there, i used to work with probably don't believe. i don't like -- it was important that we have credibility in what we do. and it extends into our products. what do we want to be remembered as? and, for example, when i look back to the dumb things that management did coming out of post-world war ii. we had an olli goply, we had 50%

he -- in fact people complain about the -- complain about the -- [laughter] >> about government involvement in general motors. in 1960, they were talking, well, they have too much market share we ought to break them up. well, were they involved in the company then? of course they were. so now they're just involved in the company from another perspective. how do we want the company tosh remembered? -- the company to be remembered. and when you look at 1960 and they were giving away post-retirement health care which was just corrosive to the cost structure and it was such a burden on the company that made us not competitive. who did that and they did it because there was no competition after the war. out of europe 'cause it was bombed out and so was asia. we were roaming the globe on a trade perspective. and these guys just wanted to buy a piece.

ford would agree with the labor contract that gm or chrysler negotiated 'cause as long as they didn't get competitive advantage. so they underestimated foreign competition, foreign quality and they were air infant. -- arrogant. i've had people come to me and say, well, what about a labor agreement till 2025? i don't want to burden my successor with that type of decision. >> your successor, you're not leaving i know, but you're committed to do this for five years or so would you say? >> yeah. the reason i wanted -- this is a criticism of thin-skinned, i guess. why did i want the chinese in this investment? because if someone looks back in 2050 to 2010 and says who was the fool running the place then and i passed an opportunity not only have to a leading market share in a dynamic position in china and i tied up with the

number one manufacturer in china from an economics point of view -- and i've been with china and i met with the senior management of the shanghai auto. this is a great partnership and i think we went in them 50/50 in india. this is 1 in 3 people on the earth live in two countries, india and china. we would be fools to pass this up. and so instead of making and committing the company to, i think, a bad strategy, it is to, you know -- so they put a half million dollars into us and i know it sounds a lot of money but it's not in the grand scheme of things. i want that tie into china and that tie into asia and in some respects it wasn't all that bad if we were known as global motors instead of general motors. >> what percentage of your stock, i think, is held by people outside of the united states now? >> about 8%. >> 8%. >> yeah. >> and today your market share in the united states is roughly what? >> well, last year at this time

we were 17 1/2 and i think we're up to 19. >> and your market share in china is what? >> almost 13, 14%. >> but that 13% is almost as many cars as you're selling in the united states? >> yeah, we'll make as many cars in china -- well, almost as many in china as we do in the united states. it's been a dramatic -- >> has anybody from the government called to thank you for getting 23 billion back in the coffers of the treasury? >> remember, not all of it went through it. the canadians got a little bit. they own a reasonably small amount, but, yes. [laughter] >> were they effusive or just polite? [laughter] >> you know, david, i thought you were more effusive here today than you ever was when i was at carlisle, i suppose, when i'm gone they might be effusive but they aren't now. i got a job to do. >> okay. well, let me ask you one last

question before we have a couple from the audience. what advice -- what was the best advice that somebody gave you when you became the ceo? did somebody -- a business colleague or somebody give you the advice, what was the best advice you got? >> probably not to take myself too seriously. this job -- i mean, look at this. i showed up here last year probably would have filled up that table. it is overwhelming the public exposure you get in this position i was surprised at that. and i think don't take yourself too sheers >> we have time for some questions. right here. speak up -- if you don't have a mic, just speak up loudly. >> in the early '70s, it used to be -- it used to be a status symbol to drive a gm car, not a

german car so listening to you i hope that those days will come back again. and driving a gm car will make us all proud outside of the u.s. but my question is, the ceo of ford talked about the sink and how they're introducing all this new technology to help a driver in a car. do you think that's a differentiater or is it really building a solid car with a good cost structure? >> i think first and foremost you have to deliver core value in the basic value proposition, good car. it's reliable. it's got great quality and it's durable. and that's why we've made huge progress.

the average residual -- what is the car worth after 3 and 5 years that gm has increased anywhere from 5 to 9 basis -- 500 to 900 basis points in the last year. so we're comparable with our competition. so get to your 1970s story, we will get there. now, we have to show that we're consistent. i mean, one can't be a good one year, two years. you've got to do it over 5 or 10 or 15 years. as it relates onstar -- when i got there, it hasn't morphed yet but i hired one of the senior nextel person to work with onstar. it was kind of a safety and security. as i described -- people were crushed and i went down there -- i've fallen and i can't get up automotives equivalent. we've got so much potential. sink is contained within the car. there's no external updates.

believe it or not, if you're driving a gm car with onstar on it, i can tell what your oil pressure is, your transmission fluid, your air in your car, your tires. i have -- i had a mercedes before i took this job. i always got a low tire and they wouldn't tell me what tire it was and i would have to fill all four of them out. by the way, isn't it warm here? i got up this morning it was 32 degrees. i left -- i got up yesterday morning it was 11. a little aside. [laughter] >> what we're going to do with onstar -- and you saw it. social media. we just loaded into it. we don't want to create bad habits with distracted driving. i just met with the secretary of transportation last week on this subject. so we're going to -- you'll be able -- texting it will be

digitized -- for every gm car you have a unique phone number attached to that and i didn't know before i was at gm. so if your spouse or someone that's running errands and you say, well, how can i get a hold of her and she never turns on her cell phone, i could call a car and it would digit download to her. i could text her. it would verbalize to her. and then i don't want her texting so we're going to try to conform four or five basic questions so she can say, yes, no or he can say yes, no. i can't talk now and i'll call you later. so we're working on that. we're working with consumer groups. or focus groups so we can bring without distracting -- right now, for example, we were driving out to annapolis and it was what restaurant do we go to? well, as you know, if you have gps you can't -- while the car is moving you can't punch it in for safety reasons. all you have to do is hit your onstar button and i want to go to such and such restaurant in annapolis. and she will say, i'll download it to you.

it's downloaded just like that. that interactivity with a database outside the automobile isn't going to be a distinction and a differentiater versus sink. we're going to start talking about safety. 'cause i don't want to say quality is a commodity but quality in terms of the way we do supply chain all around the world, we've gone to global architectures and global platforms so a car that we build in germany or we build in china or we build in the united states is basically off the same supply chain so we test like no one -- so do our competitors so the quality of cars has risen dramatically so how do i differentiate. styling. i mean, i take an active interest in all of our commercials and some of them you've seen. i look at every one of them. i want to look at every design of every car. i want -- there's certain things ceos should do and there's

certain things you should stay the hell out of. but safety and telematics are differentiaters in my mind. >> dan, in advertising, you mentioned your predecessor was on tv all the time with ads. are we going to see you on tv with any ads? >> no, you'll never see me on television. but i'll tell you, going to something i said before, i want to have a hand in them and how many you saw the falling-down ad. we all fall down. [applause] >> you know, that was a big risk for us 'cause it just reinforced the bankruptcy but, you know, everybody has troubles in their life. and we had trouble as a company. as a family. and to say we made mistakes, we failed. and that we appreciated it and we wanted to say thank you.

i got letters and emails that said, a, you're humble. we should be humble. we did fail. but you said thank you. why didn't the banks say thank you? why didn't aig who got $150 billion say thank you. and just to thank you. and that ad could only run for a week, the one week after the ipo. and we can't do it again. so, no, but i'm going to be very involved and very interested. >> time for another question. anyone else? one more, last question. >> can i ask you a question with the gm way and something you probably had issue saying yeah, it wasn't so good. you knew you had more brands than you could sustain and you did safety and quality issues. was the near death experience of bankruptcy enough to shake off the corporate culture of midlevel managers and -- [inaudible] >> i doubt it.

i talked to all the employees the good news we were in bankruptcy 39 days. i don't think we did irreparable damage to the brands. the bad news we were in bankruptcy only 39 days and there's -- i will say this. there is an element -- a segment of the population that views it as a bad storm that passed. and so we have to change. for example, we went from four to eight models. i like this. i keep -- you'd love this in my office. i keep a -- the front page, the cover of "fortune" magazine from the mid-'80s and they had oldsmobile, pontiac, chevrolet and buick and they were exactly the same. i meet routinely with the head of cadillac, gmc, buick and chevrolet 'cause i want brand identity, brand attributes and brand equity and we have what i

call swim lanes. when you're trying -- when your cars look exactly the same -- and my dad -- we always had gm cars. and when we were not doing so well we had pontiacs and when things got better we had an oldsmobile and then you approximate went to buick. -- and then you went to buick. gm is not a brand. it's a holding company. chevrolet is a brand. buick is a brand. gmc is a brand. cadillac is a brand. and we have these swim lanes where we can talk about brand attributes associated with styling, exciting, youth, reliable, value. that's the chevy. understated elegance is buick. and i want the buick to flank the premium brands so we have clear. before they were too closely budgeted. -- bunched. and we have to really intellectualize the marketing. i mean, getting to your point, you say, well, insisted how many engine types do we have? we have 18 engine types. 18 engine types and maybe i'm not a car guy but i was an

engineer once and you say what's the difference -- what's the difference between a 1.4 and a 1.5 liter engine and a guy says one-tenth of a liter. [laughter] >> and i say, yeah, i know but why -- why do we have a team dedicated to 1.4 and 1.5? and then we have what's called variance, and so i have a 1.4 in gas, diesel, turbo and you go, my god, we made it too complex and so we now have a plan to go from 18 to 9. and we have -- we had a plan -- i shouldn't say. i know there are reporters in the crowd. you know, what do we do if all goes to $100 a barrel? what do we do? we weren't ready -- or $200 a barrel. the last time oil went to $140 a barrel, we were largely suv, crossover driven and we -- and now we've got what we call a

t300 what you'll see out which will be another great small car. you've got the cruise which i think is going to be a grand slam home run and we'll come up with a an ecoengine on that and you've got the volt and the lineup is pretty impressive over the next couple of years and you say what do we do? well, right now we've got to start -- it takes years to turn this ship around. and you say, well, what do he we do if it's 120 next year and that's the question before the executive committee. i obviously have a strong point of view on that to influence that on an outcome but i want people to come to the right conclusion and i think we do have a strong plan that's not final plan but it's pretty firm on how do we reposition the company for good times? and midcycle, upcycle but what

if we have an upcycle and oil goes to $120 or $130 a barrel and what are we going to do? it will boil down to not so much design and style the top hat as i call it of the car but what do we drive the propulsion systems. propulsion is a key investment. we're spending billions of dollars. we have hydrogen cars which are really cool. i'm a real pain in the rear sometimes. well, if it's that clean let me put my face down by the muffler, by the exhaust and i did and the guy is looking at me, oh, god. [laughter] >> so i'm down there, and it's water. it's just water coming out. but the car cost $500,000 because in the chemistry of the engine you got a lot of platinum. well, platinum is like -- it's more expensive than gold. and so the actual chemistry has to be worked out before we can develop these new propulsion systems. but electricification of the car

is critical and i talked about that and we'll have a family and we want them in every one of our models we want the cadillac to be left. for example, the buick lacrosse which is, i think, the finest automobile for its money. we're killing lexus. we're killing acura on these things and you say to yourself, we get 26 miles to the gallon on the road. well, that's okay today. so we're going to put what's called a bass plus a battery alternator startup on it. it's good but it's not good enough because the government is looking at 60 plus per gallon at 2025 and how do we achieve that across the portfolio? you can't -- the founder of the mci is one of the biggest men in my life and a great mentor for me. but i mean, he told me -- when

he made me president of mci, he said dan don't try to look in the future. imagine yourself five years and where do you want this company to be and how do i get there? well, this company takes so much investment and development. it's three and four and five-year increments i can't think out five years. you have to look out well, what are we going to do in 2025? 'cause if some of the prior management had thought out 20, 25 years they would have made the designs, 1960 really in a sense sealed the fate of my immediate predecessors. they were good guys, capable, smart and had -- they were the victims of structural costs that were engaged or committed to in the '60s and '70s. >> dan, i hope it was water coming out of the exhaust pipe. [laughter] >> and i want to thank you on behalf of the economic club of washington for a terrific presentation. it's clear why you took the job.

[applause] >> let me give you a gift. hold on. [applause] >> it's a map of the district of columbia. thank you all very much for coming. thank you very much, dan. [applause] 2 [inaudible conversations] >> welcome to c-span2's booktv. every weekend we bring you 48 hours on books, history and public affairs by nonfiction authors.