GM sees new models staging rebound from 90-year US low

Written by Bloomberg | Updated: Apr 11 2012, 07:34am hrs
General Motors vice- chairman Stephen Girsky said last week the automaker wasnt panicking over its US market share slide. Ohio dealer Robert Morris III sees why.

Theres a little bit of new-product lag involved and you kind of have to wait it out, said Morris, who sells Cadillac, Buick and GMC brand vehicles in North Olmsted, about 25 minutes southwest of Cleveland. I dont perceive them as taking a wait-and-see attitude or just taking it on the chin.

At 17.5%, GMs US market share through March may have surprised some people, Girsky, 49, told analysts April 4. Its below the 19% level that was the average full-year estimate of five analysts Bloomberg surveyed in January. GM finished 2011 with 19.6% of the US market, according to researcher Autodata Corp. The last time it ended a year with 17.5% market share or less was 1922.

The drop for GM, which retook the title of the worlds top selling automaker in 2011, is among the biggest surprises this year in US market share moves. Increased demand is spurring analysts and automakers to boost 2012 sales estimates.

Chrysler Group added 2.1 percentage points of market share, showing up the five analysts that Bloomberg surveyed in January. They estimated Chrysler, GM and Ford Motor would cede share to the rebounding Toyota Motor, which lost the 2011 worlds sales crown to GM, and Honda Motor.

GMs product is getting stale, John Wolkonowicz, an independent analyst in Boston and former Ford product planner, said in a phone interview. Chrysler is having some of the Little Engine That Could phenomenon right now. They were the real underdog thats pulled themselves up by their bootstraps and theyre hot stuff all the sudden.

GM pulled back on incentive spending per vehicle by $405, or 11%, this year in the first three months to an average of $3,161 for every car and light truck it sold, according to Autodata. The automakers sales still grew 2.7% through March, and its total light-vehicle deliveries led Ford, No. 2 in the US, by 70,498 and Toyota by 121,036.

In the first quarter, Detroit-based GM had five of the top 20 selling vehicles in the US, including the Silverado pickup and Malibu sedan. The company last week unveiled a redesigned Impala sedan at the New York auto show.

Morris, the Ohio dealer, is just ramping up sales of GMs new Buick Verano compact and will have the Cadillac ATS sports sedan and XTS large sedan to sell by the end of the third quarter. Those are among the new models that GM has said its introducing in 2012 for segments representing 60% of US retail deliveries.

Were going to be competing in segments where we havent been before, Morris said in a telephone interview. The fuel economy is much better for something like ATS or Verano. We didnt have small entries like that, so we didnt have a car to compete.

Chrysler deliveries climbed 39% through March to 398,051, boosting its share to 11.5%. Analysts estimated that the automaker controlled by Fiat would end this year with 10.5% share, down from 10.7% in 2011.

We never really saw Chrysler increasing their share as much as they have, Alec Gutierrez, an analyst at Kelley Blue Book in Irvine, California, said in a telephone interview. Consumers are getting the sense that Chrysler is once again producing higher quality products. The last couple years, people shied away from Chrysler because there was still uncertainty about their viability.

New or redesigned models such as the Chrysler 200 and 300 sedans and Jeep Grand Cherokee sport-utility vehicle led the automakers sales to outperform Kelley Blue Books estimates, he said. Bloomberg also gathered estimates from analysts at AutoPacific, LMC Automotive, Edmunds.com and TrueCar. com for the January survey.

Chrysler is adding third shifts at plants in Illinois and Ohio this year to meet demand, said Reid Bigland, head of US sales for Auburn Hills, Michigan-based Chrysler. That should give the automaker enough capacity to maintain market share gains if demand in the U.S. keeps accelerating, he said.

But remember the old saying market share is vanity and profitability is sanity, Bigland wrote in an e-mail. We are going to continue to run a disciplined game plan first with our market share numbers being secondary.

Ford sees its share of the US market falling this year, Mark Fields, the automakers president of the Americas, told analysts last week at an industry conference in New York. The Dearborn, Michigan-based automaker previously forecast share to be about equal with 2011s 16.8%.

Market share is important, but we also want to do that profitably, Fields told reporters last week at the New York auto show. We wont engage in marginal business through deliveries to fleets or bigger discounts.