General Motors (NYSE:GM) executive officer Mary Barra has announced to investors that they have a solution to the problems they are experiencing in relation to small cars. The CEO said that the company will put sales of new models to the top of their Chinese agenda and bolster profits for the next number of years. The announcement comes against the backdrop of a recall of older models being mishandled by GM.

The announcement came as Barra was under pressure to assure General Motors (NYSE:GM) investors that the company had a robust plan in place for the future. The stock price has been in decline this year, losing 18 percent annually. Though it did rise by a margin of 2.6% in the afternoons trades.

The recall in question took place earlier this year when GM recalled a reported 2.6 million cars from it’s small car range globally due to faults with the ignition switches which are alleged to have caused 23 deaths in the US alone. In response the company made the parts needed to fix the problems though less than half have had their ignition systems repaired to date.

The problem was not news to General Motors (NYSE:GM) who were aware of the potential malfunction for the best part of ten years. The problem occurs when the ignition switches malfunction resulting in the car stalling, this causes the air bags to de-activate.

The company has announced through Barra that it estimates a figure of $400 million to $600 million will have to be put aside in compensation to victims and has employed Kenneth Feinberg, a renowned compensation expert, to oversee the process. The first cases were resolved in the past week.

GM has put a roll out of new models at the centre of its strategy for growing its profit margins and is expecting 27% of its worldwide sales to develop from its new or reinvigorated stock in the coming year, rising to 47% by 2019. Barra would not be drawn on the amount of new models the company was preparing to unveil in the coming years.

Analysts say that the move, along with other cost saving measures, means that GM is in line for a pre-tax profit margin of 10% in North America within two years, and the same figure across the entire company by the early part  of the next decade.

The company also expects to have its European operations in the black by 2016, while it is continuing to work on its operational troubles outside China internationally. Barra has claimed that if GM continues along the lines of their current plan, dividends will be set to rise. Claiming that if they hold fast to their objectives shareholders will see the returns they are deserving of, though she did not give any more specific information.

Most importantly for the company, Barra claimed the ignition switch fiasco had led to changes in the culture of the company and had made their leadership stronger. She continues to push for changes.

General Motors (NYSE:GM) is currently trading at 32.47 having opened at 31.94. The daily high was 33.03 and a low of 31.71 The one year high is 41.53 while the low is 31.93 Dividend yield is 3.69%

 

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