Sales boosts crucial for GM

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General Motors has seen month-over-month market share increases since emerging from bankruptcy.

Going forward, the Detroit automaker will need to see sales increases among the four brands it is keeping in order to offset the losses from the wind-down or sell-off of its Saturn, Pontiac, Saab and Hummer brands.

GM reports that the four core brands it is keeping?Chevrolet, Cadillac, Buick and GMC?saw a market share increase of 2.9 points in September over July, when GM emerged from bankruptcy.

The automaker credits the launches of new products, which include the Buick LaCrosse sedan, GMC Terrain, Chevrolet Equinox and Cadillac CTS Wagon.

“We’ve got some great launch products out there. We’ve been doing really well from a marketing standpoint in getting our message out there and getting people to consider our cars,” said spokesman John McDonald.

GM’s overall market share ended September at 19.7 percent for the year so far.

According to GM’s May plan, the automaker hoped to end the year with an 18.5 percent U.S. share. Its April turnaround plan assumes a share of 18.4 percent-18.9 percent going forward. The plan calls for GM to be able to break even in a U.S. market of just 10 million sales a year.

The year-to-date figures are not as encouraging for GM’s four core brands, which dropped to 16.8 percent from 18.5 percent during last year at the same time, Autodata Corp. said.

October is an important month. October 2008 marked a dramatic fall-off in U.S. sales as the economy plummeted and many feared that a recession would become a depression.

“The comparisons are going to get far easier, and it’s not just for GM but for everybody,” said industry analyst Erich Merkle, president of Autoconomy.com.

He added: “But how does (GM) fare with everyone else in the rest of the market? Will sales at competitors be stronger? I can tell you that Toyota isn’t going away. . . . And Ford right now has such a strong product pipeline.”

GM executives face intense pressure to prove their market-share predictions are on track. Chairman Ed Whitacre has made it clear that CEO Fritz Henderson and his team must show results in upcoming weeks.

Getting sales market predictions and assumptions correct are incredibly important for managing an automaker because it is hard to change course midstream if those things are wrong.

That means a company can either lose money because it has too many new vehicles or miss out on potential sales because it has too few. Analysts have questioned whether GM can keep its share constant with the loss of four of its eight U.S. brands.

IHS Global Insight’s U.S. market-share predictions call for market shares of 17.2 percent at Toyota, 16.8 percent at Ford and 16.1 percent at GM.

The firm says GM’s market share will be heavily impacted by the loss of four brands, especially Pontiac. Analysts have equated the loss of Pontiac to Toyota losing Lexus.

“The company can still be profitable at this level. It means the market overall has to be a larger market, which it will be,” Bragman said. Because the economy hasn’t yet recovered, Bragman is hesitant about current market results.

“I think it’s premature to draw any conclusions, especially given the rest of 2009,” he said. “2009 has been such a screwy year.”


(c) 2009, Detroit Free Press. Source: McClatchy-Tribune Information Services.