At Mary Barra’s GM, It’s Profit Before All Else

Last summer, General Motors Co. Chief Executive Officer Mary Barra flew to the headquarters of General Motors India with a message the team didn’t want to hear. She told Executive Vice President Stefan Jacoby, who runs the carmaker’s international businesses, that a planned $1 billion investment in India might be a bad bet. Even if they could make money, profit margins on the small cars sold there could water down GM’s earnings for years.

While scrutinizing the India operation over the next six months, GM President Dan Ammann received word that Peugeot SA CEO Carlos Tavares might be willing to buy GM’s long-struggling Opel business. For Barra, that raised two important questions. First, if she was holding India to GM’s profit targets, why should Europe get a pass, especially since Opel had been losing roughly $1 billion a year since 1999? Second, she began wondering whether India was truly so different from other emerging markets, which require billions of dollars in investment just to sell small cars that generate slim profits.