Mary Barra gains GM’s chair with an expanding focus on autonomous cars, connectivity and financial services

Barra mary

General Motors board of directors has unanimously elected Mary Barra as its next chairman, effective immediately. She succeeds Theodore (Tim) Solso, who will continue serving as the board’s lead independent director.

Barra has served as GM CEO since Jan. 15, 2014.

Solso explained: “At a time of unprecedented industry change, the board concluded it is in the best interests of the company to combine the roles of chair and CEO in order to drive the most efficient execution of our plan and vision for the future. With GM consistently delivering on its targets and on track to generate significant value for its shareholders, this is the right time for Mary to assume this role.”

Solso indicated Barra has set a clear vision for the organization over the past two years, formed a strong leadership team from inside and outside the company, delivered strong operating results and led the introduction of breakthrough vehicles and technologies.

Barra said: “I am honored to serve as chair of the board of directors. With the support of our board, we will continue to drive shareholder value by improving our core business and leading in the transformation of personal mobility.”

Managing the ignition switch crisis

Mary Barra came through GM’s ignition switch crisis with much credit. She acknowledged “a pattern of incompetence and neglect” that allowed the safety problem to go undetected for nearly a decade – and was candid and transparent in her handling of the fallout. She appointed an independent investigator and named an outsider to review and approve claims against the company. She fired 15 individuals and instilled a renewed safety focus inside the company.

In addition she struck a deal with US prosecutors, who called GM’s cooperation “fairly extraordinary.” Ultimately 124 deaths were blamed on the faulty switches, and GM paid about $2 billion in fines and settlements.

GM has delivered on its promises. Aside from the cost of the ignition switch crisis and other safety-related recalls, Barra has built a solid track record for financial performance. Fueled by strong sales of trucks and SUVs, GM has reported nine straight quarters of improved profits in North America, and has remained solidly profitable in China, despite market headwinds. She is on track toward her goal of 9 to 10% profit margins (earnings before interest and taxes) by early next decade.

Barra has a distinct vision for the future. Her strategy includes leading in technologies like autonomous cars, connectivity and ride-sharing (Yesterday, GM announced a $500 million investment in Lyft), as well as increasing sales in China, growing the Cadillac brand around the world and expanding the company’s financial services arm.

She can also make tough decisions. Barra is proving to be more disciplined than previous GM CEOs, cutting businesses that don’t achieve a return on investment of at least 20 percent. That led to surprising decisions to pull Chevrolet out of Europe, and to scale back most of GM’s operations in Russia, Thailand and Indonesia.

Prior to being named CEO in 2014, Barra served as executive vice president, global product development, purchasing & supply chain since August 2013, and as senior vice president, global product development since February 2011. In these roles, she was responsible for the design, engineering, program management and quality of GM vehicles around the world.

A common view of the future

News of the promotion comes as GM and Lyft announced an alliance to develop an on-demand network of autonomous vehicles as well as a $500 million investment by the carmaker as part of a $1 billion fund-raising round by the ride-sharing service.

The two companies said the partnership, which involves one of GM’s largest investments in another company, stemmed from their shared view that autonomous vehicles will first reach consumers as part of a ride-sharing service, rather than vehicles owned by drivers.

“We had a really common view of the future” with Lyft, said GM president Dan Ammann in an interview with Reuters. Ammann will join Lyft’s board as part of the deal.

In the same interview, Lyft president John Zimmer echoed that view, saying the “culture and vision are very alike” between the two companies.

Lyft said other investors in this fundraising round included Kingdom Holding Company, the firm of prominent Saudi investor Prince Alwaleed bin Talal which invested $100 million, Janus Capital Management, Japanese online retailer Rakuten Inc , ride-hailing service Didi Kuaidi and Chinese Internet giant Alibaba Group Holding.

“Lyft has built a strong business with fast growth and we believe in their long-term success,” Alwaleed said in a release. Kingdom and Alwaleed are major investors in US tech companies; together they own more than 5% of Twitter Inc, for example.

New alliances and technologies

The GM-Lyft deal comes as automakers and Silicon Valley companies are exploring new alliances and new technologies that will reshape the global automotive industry.

“We think our business and personal mobility will change more in the next five years than the last 50,” said Ammann.

GM and Lyft said the partnership would tap into GM’s work on developing autonomous vehicles and Lyft’s software that automates matching drivers and passengers, routing and payments to create a network of cars that would operate themselves and be available on demand.

Lyft said this latest funding round valued the company at $5.5 billion as it engages in a fundraising race with its biggest competitor, Uber Technologies Inc. Lyft said it has raised a total of $2 billion since August 2013. Uber is reportedly in the midst of a $2.1 billion funding round that would value it as high as $64.6 billion.