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Thursday, March 24, 2005


GM Woes

I've written in the past of the declining fortunes of the Big 3/Three (now sort of 2, since Chrysler Group is really a German company). GM's marketshare has gone from the high 30's since I started working in the car business (80's) to the mid 20's today. All along, bonuses and salaries have been meted out on a regular basis. Makes you wonder...

Based on some of the research we've done over the past few years, the only way the domestics have stayed in the game is through liberal incentives and the fortune of a huge dealerbody that is constantly scrambling to move the metal out of inventory with huge incentives and massive ad budgets. Without car dealers, there would not be newspapers as we know them today...they fund most of the classified...and therefore, the newspapers.

Bob Lutz admitted that it may be necessary for GM to eliminate another brand. That was quickly ameliorated the following day by Mark LaNeve...but the cat was out of the proverbial bag. If Oldsmobile can die, so can Buick, Pontiac, GMC and/or Saturn. Or Saab. Same goes for Mercury and Jaguar on the Ford side. No, I'm not saying they are going to die...but the finance guys will soon make the determination without bothering to consult my blog for advice. It will be a cold, hard decision...just like Oldsmobile. Detroit needs a strong GM, Ford and Chrysler. And the stockholders and retirees have to be wondering about their pensions and health benefits. See the recent Detroit newspaper articles in the News and Free Press.

What About The Executives?

What strikes me as odd is this...GM has lost the marketshare of a company like Toyota in the U.S. (or Honda, let's say) in the last 15 years...about 10 points...in consumer speak, that's about 1.6 million sales.

In sales dollars that's 1.6 million units in lost sales times an avg $25,000 sticker price. Or about $40 billion in sales. Staggering.

Mr. Stempel paid the price in the early 90s...but so what? The path down continues. Others have tried to stem the tide and one sees occassional profits but one number doesn't lie. Take a look at the chart in the Detroit News article. In 1990, GM has 35.2% of the U.S. Market. Today, it's 25%. And that's with a lot of incentives. If you take away the incentives...sales plummet further and more plants have to be closed. If you maintain them losses continue. Not a good picture. The only way out of that hole is product. Let's hope that GM has a marketing and product strategy that begins to address segment losses to the "imports." In my opinion it starts with leadership at the top. Here's hoping the next generation of GM execs has solutions other than incentives.

Hi, your blog has some interesting topics in it. I also have one that pretty much talks about place free classified ad related stuff. You should take a look at it sometime.
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