GM Can Purr After Tune-Up

A second job now is to sell cars, particularly to the former customers of Pontiac, which sold 88,794 cars in the first half of 2009, or 9% of all the vehicles GM sold in the U.S. The Pontiac brand is being discontinued.

"GM has a strong product lineup," says Wolkonowicz. "The key thing will be to convince the American public that their quality is as high as it actually is. The talk on the street is that American cars aren't much good, because perception in the market place always lags reality. So this will take them five to 10 years."

Bruce Belzowski, associate director of the University of Michigan Transportation Research Institute, says GM also a third task, which is avoiding the long litany of past management mistakes, such as intra-company rivalries and glacial decision making. "They've done a good job of getting rid of excess dealers, reducing fixed costs, and maintaining a good working relationship with the UAW," Belzowski says. "But how are they going to manage the new company?

In particular, "they have to create a new small product development cycle, and they have to get the fuel efficiency gains they need to meet 2016 goals," he says, adding that GM is ahead of Chrysler in bringing fuel-efficient cars to market, but is behind Ford(F Quote), "which has a little better time frame in terms of when they need to have smaller cars on the road."

New GM will have just four brands, including Buick and GMC, and just four owners. It will be 60.8% held by the U.S. Treasury. Remaining shareholders will be the United Auto Workers Retiree Benefits Trust with 17.5%, the governments of Canada and Ontario with 11.7%, and bondholders in the former GM, who will have 10%. The bondholders and the benefits trust will also hold warrants for 15% and 2.5%, respectively.