Four for the Road at GM

When Thomas Aquinas Murphy graduated from high school in Cicero, Ill., his family was so strapped that he spent most of three frigid years working in ice-making plants before going on to the University of Illinois. Last week, after 36 years at General Motors (all but four in finance), Murphy, 58, took the final step in from the cold; the serious, spectacled accountant was named chairman and chief executive of General Motors, the most prestigious corporate post in the world. "Murph" will take office Dec. 1, a week after his predecessor, Richard C. Gerstenberg, who earned $923,000 in salary and bonus last year, reaches GM's mandatory retirement age of 65.

Murphy's old job as vice chairman has been split between the cherubic financial vice president Oscar A. Lundin, 63, who will serve as chairman in Murphy's absence, and a soft-spoken "generalist," Richard L. Terrell, 55, who rose from messenger through a wide variety of jobs at GM to head the car, truck, body and assembly divisions. Terrell had been considered a candidate for president and chief operating officer, but that post went to a friendly rival, Elliott M. ("Pete") Estes, who replaces retiring president Edward N. Cole, an innovative engineer. Estes, 58, a jovial, mustachioed product engineer and auto-racing enthusiast, joined GM as a teenager in 1934. As president, he will oversee GM's $3.6 billion foreign operations, while continuing to manage North American auto production.

Land Cruisers. The four-man team takes over as GM struggles to recover from its worst slump since the 1958 recession. In this year's first half, unit sales slid 26%, and profits dived 74%. Last winter's gasoline shortage and the public's quick shift to smaller cars jolted GM more severely than other automakers. Traditionally committed to large luxury-studded land cruisers, the firm was forced to lay off more than 160,000 workers while retooling to produce small cars. At financial analysts' meetings this summer, top GM executives soberly predicted that sales and profits would not climb back to last year's record levels until 1977.

GM watchers foresee no radical departures by the new management from an emphasis on full-size, annually changed cars. Even as gas lines snaked half a mile last winter, the firm's analysts predicted that small car sales would drop back below 50% of the U.S. market; indeed, they now account for 47% of all cars sold in the U.S. But GM is nonetheless active in the small-car market. This fall's lineup sports four new subcompacts (Chevrolet Monza, Buick Skyhawk, Pontiac Astre and Oldsmobile Starfire).

To lift sales and profits, Murphy's team has two strategies. First, brake the soaring costs of production (estimated to be rising at $50 a car each month) by building more components in-house and striving to increase productivity. Second, increase fuel economy by trimming hundreds of pounds from the average 4,500 lb. weight of GM's full-size cars by 1978; that would doubtless increase sales of those models. Murphy also expects that material costs will ease fairly soon as demand cools hi the world economy.

"Prices should begin coming down," says Murphy, "and when they do, they may do so in a rush." Any such rush could rekindle the old love affair between consumers and GM's full-size dreamboats.

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