Measuring GM's Success by Looking at Marketshare..
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Measuring GM's Success by Looking at Marketshare..
This article highlights a problem I think GM will have moving forward. Basically too many people tie the idea of GM being a success to it's current market share. I was surpised to read in the article it is only down 2% this year. The problem is..what happens when GM cuts the 4 divisions it plans from the count? The days of a GM having 20% of the market may be long gone. I guess what I am saying is...if you tie the idea of GM becoming successful to gaining market share/holding the line one market share (as this article does) then you are gonna be in for a big let down. It is going to be simply impossible when you lop off 4 divisions and hundreds of dealers.
http://online.wsj.com/article/SB124690290741101607.html
http://online.wsj.com/article/SB124690290741101607.html
General Motors Corp. is set to emerge from bankruptcy into an economic downturn that presents a major challenge for the country's largest auto maker -- and for the White House that saved it.
Sunday's late-night ruling from the bankruptcy court cleared away objections to GM's reorganization. Later this week, GM Chief Executive Frederick "Fritz" Henderson plans to introduce a revamped GM as a greener, more customer-focused company with a leaner management, people briefed on the plan say.
The new company carries substantial baggage when it comes to fuel economy, in part because of its dominance of the truck market and years of fighting emissions legislation. Mr. Henderson's announcement will be supported by a litany of new products aimed at shattering that image, ranging from a compact Chevrolet and small Buicks to the battery-powered Chevrolet Volt and a similar Cadillac model.
Mr. Henderson's management team largely consists of lifetime employees with decades of service. These executives have presided over continuing market-share declines and produced billions in red ink in recent years.
Since taking over in April, Mr. Henderson has repeatedly said the executive ranks must be thinned. GM is expected to ax 4,000 white-collar workers by October, and not offer jobs to about a third of the management team Mr. Henderson inherited from his predecessor, Rick Wagoner.
Nonetheless, the new GM still has a rough road ahead. The company, soon to be 60% government-owned, continues to lose market share to foreign rivals, having shed nearly two percentage points of its U.S. share in just the past six months. Some buyers have flocked to GM's chief U.S. rival, Ford Motor Co., allowing Ford to substantially narrow its market-share deficit with GM in June.
For the Obama administration, risks also abound as voters and political opponents wait to see a return on the huge sums taxpayers have invested in the auto companies. By the end of the year, the U.S. government will have put $50 billion into GM and more than $12 billion into Chrysler, along with tens of billions more to suppliers, lenders and GM's former credit company, GMAC.
Senior administration officials say from now on they will take a back seat, leaving day-to-day operations to the companies' revamped boards. "We are not going to micromanage," says Steven Rattner, a principal member of the Treasury-led auto task force.
Mr. Rattner says GM could make an initial public share offering as early as the first half of 2010, though the government will be judicious in selling its stakes to get the best deal for taxpayers.
By shedding brands, dealers and significant chunks of debt, GM and Chrysler are better set to survive the sharp downturn in car sales. A deeper and longer slump, though, could upset their plans.
The industry's car and light-truck sales last month came in at an annualized rate of 9.7 million vehicles, down from 9.9 million in May but up from earlier in the year. GM officials say the company should be able to break even if those sales are just above 10 million units a year.
In a sign of how rapidly GM's position has deteriorated in the U.S., the auto maker said Monday that its vehicle sales in China in the first half nearly surpassed the 954,356 vehicles it sold in the U.S.
With 82 days' worth of unsold vehicles stacked on dealer lots, GM has significantly more inventory than any major rival. To clear the glut, GM ran a fire sale over the weekend, offering buyers 0% financing on 72-month loans.
"The share loss has to stop at some point in order for the company to be truly viable," Mr. Rattner acknowledged.
Mr. Henderson is racing to broker the sale of three brands -- Hummer, Saab and Saturn -- and a stake in its former German subsidiary, Adam Opel GmbH.
The Obama administration is putting great stock in its appointment of Edward Whitacre, former chief executive of AT&T Inc., as GM's first independent, nonexecutive chairman since the mid-1990s.
Mr. Whitacre is expected to be introduced as chairman as early as Thursday.
The administration picked him primarily because it didn't think GM's management team had proper oversight or could deliver quick results, according to a person familiar with the matter.
—Norihiko Shirouzu contributed to this article.
Sunday's late-night ruling from the bankruptcy court cleared away objections to GM's reorganization. Later this week, GM Chief Executive Frederick "Fritz" Henderson plans to introduce a revamped GM as a greener, more customer-focused company with a leaner management, people briefed on the plan say.
The new company carries substantial baggage when it comes to fuel economy, in part because of its dominance of the truck market and years of fighting emissions legislation. Mr. Henderson's announcement will be supported by a litany of new products aimed at shattering that image, ranging from a compact Chevrolet and small Buicks to the battery-powered Chevrolet Volt and a similar Cadillac model.
Mr. Henderson's management team largely consists of lifetime employees with decades of service. These executives have presided over continuing market-share declines and produced billions in red ink in recent years.
Since taking over in April, Mr. Henderson has repeatedly said the executive ranks must be thinned. GM is expected to ax 4,000 white-collar workers by October, and not offer jobs to about a third of the management team Mr. Henderson inherited from his predecessor, Rick Wagoner.
Nonetheless, the new GM still has a rough road ahead. The company, soon to be 60% government-owned, continues to lose market share to foreign rivals, having shed nearly two percentage points of its U.S. share in just the past six months. Some buyers have flocked to GM's chief U.S. rival, Ford Motor Co., allowing Ford to substantially narrow its market-share deficit with GM in June.
For the Obama administration, risks also abound as voters and political opponents wait to see a return on the huge sums taxpayers have invested in the auto companies. By the end of the year, the U.S. government will have put $50 billion into GM and more than $12 billion into Chrysler, along with tens of billions more to suppliers, lenders and GM's former credit company, GMAC.
Senior administration officials say from now on they will take a back seat, leaving day-to-day operations to the companies' revamped boards. "We are not going to micromanage," says Steven Rattner, a principal member of the Treasury-led auto task force.
Mr. Rattner says GM could make an initial public share offering as early as the first half of 2010, though the government will be judicious in selling its stakes to get the best deal for taxpayers.
By shedding brands, dealers and significant chunks of debt, GM and Chrysler are better set to survive the sharp downturn in car sales. A deeper and longer slump, though, could upset their plans.
The industry's car and light-truck sales last month came in at an annualized rate of 9.7 million vehicles, down from 9.9 million in May but up from earlier in the year. GM officials say the company should be able to break even if those sales are just above 10 million units a year.
In a sign of how rapidly GM's position has deteriorated in the U.S., the auto maker said Monday that its vehicle sales in China in the first half nearly surpassed the 954,356 vehicles it sold in the U.S.
With 82 days' worth of unsold vehicles stacked on dealer lots, GM has significantly more inventory than any major rival. To clear the glut, GM ran a fire sale over the weekend, offering buyers 0% financing on 72-month loans.
"The share loss has to stop at some point in order for the company to be truly viable," Mr. Rattner acknowledged.
Mr. Henderson is racing to broker the sale of three brands -- Hummer, Saab and Saturn -- and a stake in its former German subsidiary, Adam Opel GmbH.
The Obama administration is putting great stock in its appointment of Edward Whitacre, former chief executive of AT&T Inc., as GM's first independent, nonexecutive chairman since the mid-1990s.
Mr. Whitacre is expected to be introduced as chairman as early as Thursday.
The administration picked him primarily because it didn't think GM's management team had proper oversight or could deliver quick results, according to a person familiar with the matter.
—Norihiko Shirouzu contributed to this article.
Last edited by formula79; Jul 8, 2009 at 02:25 AM.
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I said this from the VERY GET GO. GM is dropping it's 3RD best selling brand (Pontiac) and keeping others like Buick.
GM best selling is Chevrolet, GMC, Pontiac. Profit or not, Pontiac brings home the bucks and more sentimental value than Buick ever could.
Welcome the Fritz era!!!!!!!!!!!!
As my own edit and I don't feel like fitting it in:
GM bankrolled their future on the Volt. Whether they say it or not, the only way the programs going to be afforded is by bankruptcy and by putting all the eggs in China which Fritz said in a web-chat he didn't like himself.
I give "GMC" 2 years.
GM best selling is Chevrolet, GMC, Pontiac. Profit or not, Pontiac brings home the bucks and more sentimental value than Buick ever could.
Welcome the Fritz era!!!!!!!!!!!!
As my own edit and I don't feel like fitting it in:
GM bankrolled their future on the Volt. Whether they say it or not, the only way the programs going to be afforded is by bankruptcy and by putting all the eggs in China which Fritz said in a web-chat he didn't like himself.
I give "GMC" 2 years.
Last edited by Josh452; Jul 8, 2009 at 12:51 AM.
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The essence of it is pretty simple -- GM is moving a lot of "fixed costs" into the "variable costs" column. That means they shouldn't need to produce a car unless they can sell it for a profit.
It also means they are going to lose tons of marketshare because they are getting out of the 'bottom-feeder' business. (fleet dump, employee sales, red tag sales, etc etc etc.) BUT, the second-order effect of that is that GM can deal with it's marketing issues by no longer producing cars that hurt their reputation, or quality-levels, or resale values. That should improve the owner experience and increase word-of-mouth sales, i.e directly address the "perception problem".
And I agree that far too many people said "look at their marketshare" while they were racking up 8-digit losses.
(Also, formula79, I've been meaning to ask you what your GMI nickname is. It's been a phenomenal site in these times of dire news.)
It also means they are going to lose tons of marketshare because they are getting out of the 'bottom-feeder' business. (fleet dump, employee sales, red tag sales, etc etc etc.) BUT, the second-order effect of that is that GM can deal with it's marketing issues by no longer producing cars that hurt their reputation, or quality-levels, or resale values. That should improve the owner experience and increase word-of-mouth sales, i.e directly address the "perception problem".
And I agree that far too many people said "look at their marketshare" while they were racking up 8-digit losses.
(Also, formula79, I've been meaning to ask you what your GMI nickname is. It's been a phenomenal site in these times of dire news.)
Last edited by flowmotion; Jul 8, 2009 at 02:49 AM.
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I can't make sense of this statement. "bringing home the bucks" should be synonimous with being profitable. If not, what does it mean? Sentiment alone doesn't create profitability. I would judge GM's success by their bottom line, which is profit! Market share is only one tool in increasing profit. You have to make a competitive and profitable product first.... ONLY with that in place should a company work to increase their market share, and they should do so with the goal of increasing their economies of scale to further increase their PROFIT!
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See I think we are gonna see the oposite.
A.) GM is gonna lose marketshare fast once brands are cut. To stem the bleeding, and not look like a failure, they will do whatever they can to milk sales out the models they have...ie Fleets, rebates.
B.) I am concerned that we are gonna see a lot more beancounter influence on the newer cars GM designs. We all know what beancounters do to product quality and desirability. How many models can they get on Epsilon?
A.) GM is gonna lose marketshare fast once brands are cut. To stem the bleeding, and not look like a failure, they will do whatever they can to milk sales out the models they have...ie Fleets, rebates.
B.) I am concerned that we are gonna see a lot more beancounter influence on the newer cars GM designs. We all know what beancounters do to product quality and desirability. How many models can they get on Epsilon?
The essence of it is pretty simple -- GM is moving a lot of "fixed costs" into the "variable costs" column. That means they shouldn't need to produce a car unless they can sell it for a profit.
It also means they are going to lose tons of marketshare because they are getting out of the 'bottom-feeder' business. (fleet dump, employee sales, red tag sales, etc etc etc.) BUT, the second-order effect of that is that GM can deal with it's marketing issues by no longer producing cars that hurt their reputation, or quality-levels, or resale values. That should improve the owner experience and increase word-of-mouth sales, i.e directly address the "perception problem".
And I agree that far too many people said "look at their marketshare" while they were racking up 8-digit losses.
(Also, formula79, I've been meaning to ask you what your GMI nickname is. It's been a phenomenal site in these times of dire news.)
It also means they are going to lose tons of marketshare because they are getting out of the 'bottom-feeder' business. (fleet dump, employee sales, red tag sales, etc etc etc.) BUT, the second-order effect of that is that GM can deal with it's marketing issues by no longer producing cars that hurt their reputation, or quality-levels, or resale values. That should improve the owner experience and increase word-of-mouth sales, i.e directly address the "perception problem".
And I agree that far too many people said "look at their marketshare" while they were racking up 8-digit losses.
(Also, formula79, I've been meaning to ask you what your GMI nickname is. It's been a phenomenal site in these times of dire news.)
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As many as Nissan gets out of TT-L/D?
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Certainly, nobody, including GM's management, really knows if they can become profitable long-term or not. There are just to many variables; most especially the total vehicle market.
"They" say they can be profitable at 10M units/year but I find that doubtful and if true, it would be at odds with what other manufactures are saying - more likely is that it's going to take a TVM of 13-14M units. At that level, there should be enough market to to go around for everyone, or at least most, to be profitable; assuming the GM's cost per unit is going to be in line with most of its competition.
At least, that's how I see it.
"They" say they can be profitable at 10M units/year but I find that doubtful and if true, it would be at odds with what other manufactures are saying - more likely is that it's going to take a TVM of 13-14M units. At that level, there should be enough market to to go around for everyone, or at least most, to be profitable; assuming the GM's cost per unit is going to be in line with most of its competition.
At least, that's how I see it.
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Buick was not designed to be a high volume brand. Many brands are not high volume brands. By your standards, Honda should ditch Acura and Toyota should ditch Lexus because they don't have a lot of volume. Sorry, those brands make money. Whether you like it or not, Buick makes money.
Every plan I have heard for making Pontiac a niche brand also kills the volume argument, because it would be exactly that... niche. Niche brands can make money. If GM could afford to do that right now, they probably would. They don't have the money. They can't do it... right now.
On to the topic at hand...
Market share means nothing if the company isn't profitable. If GM continues to be unprofitable because it is trying to keep market share, they shouldn't stick around.
GM needs better cars to sell. Not 3 ways to sell you the same car that look different, have the same available options, and pricing (a la G6, Malibu, Aura).
With Chevy Buick Caddy, the car lines aren't blurred like they were with Saturn and Pontiac in the mix as well. It also gives a little room for Chevy to have some nicer materials.
Chevy GMC Caddy for trucks... well GMC is really close to Chevy, but also makes money. Buick dealers need GMC and GMC dealers need Buick since Pontiac is gone.
Honestly, the plan that GM has makes sense. Many enthusiasts hate it. But it is the right thing for the company.
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And churning out a massive number of Epsilons is the most direct route to get back into the black. I don't see a problem with that, as long as the cars themselves are of high quality and well-differentated. (Unlike the G6/Aura/Malibu which were essentially three takes on the same car.)
People here are mostly focused on the fun cars, but Old GM sure spent a lot of time and money farting around with Sigma/Kappa/Zeta while their mainstream sedan line was rotting out from under them. They need to hunker down and focus on the bread-n-butter stuff, i.e. Epsilon.
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I offer this advice to anyone fixated on market share as a measure of success:
IGNORE MARKET SHARE....FOCUS ON PROFIT-PER-VEHICLE!!!!
Quick story I'm sure 99% of those of you around here back in the 1st half of the decade.
Ford (well before Mulally became CEO) decided to no longer focus on market share. They decided to focus on quality and making more money per vehicle. Since that time, and begining with the Ford F-series and the '94 Mustang, Ford has avoided recalls on every new vehicle, something no other car maker can claim. Ford also increased the percentage of new car development money on interiors.
Around the time Mulally came aboard, Ford decided to take the leap, and begin pulling out of depending on rental and fleet buyers to keep factories at top production, and restricted fleet deals on each new model that came out. Ford began closing down plants, and consolidating production at others.
Today, yes Ford's still losing money. But it's no where near what GM or even Chrysler was losing.
Ready for a shock?
GM's market share has now dropped to 19%....
..... and Ford's now up to 17%!!!
And guess what. Alot of it isn't just conquest sales from GM... it's conquest sales from Toyota as well.
Right now, GM's ONLY focus should be on improving profit per car, while at the same time leapfrogging over imports on percieved quality.
That means spending the extra $50 on better interior materals and charge an extra $60 for it instead of looking for ways to cut another $10 out of an already marginal interior. It means manning a factory to make 100,000 cars at retail price instead of manning for 200,000 and selling half at break even or even a loss. This means that you don't need to pay executives of 5 comittees to decide whether or not to make a new model when a single comittee of one person from each department will do.
Focusing on market share means squat. Bob Lutz's 29% pins didn't do anything for GM.
But focusing on making great cars with good margins on them, that's what works.
IGNORE MARKET SHARE....FOCUS ON PROFIT-PER-VEHICLE!!!!
Quick story I'm sure 99% of those of you around here back in the 1st half of the decade.
Ford (well before Mulally became CEO) decided to no longer focus on market share. They decided to focus on quality and making more money per vehicle. Since that time, and begining with the Ford F-series and the '94 Mustang, Ford has avoided recalls on every new vehicle, something no other car maker can claim. Ford also increased the percentage of new car development money on interiors.
Around the time Mulally came aboard, Ford decided to take the leap, and begin pulling out of depending on rental and fleet buyers to keep factories at top production, and restricted fleet deals on each new model that came out. Ford began closing down plants, and consolidating production at others.
Today, yes Ford's still losing money. But it's no where near what GM or even Chrysler was losing.
Ready for a shock?
GM's market share has now dropped to 19%....
..... and Ford's now up to 17%!!!
And guess what. Alot of it isn't just conquest sales from GM... it's conquest sales from Toyota as well.
Right now, GM's ONLY focus should be on improving profit per car, while at the same time leapfrogging over imports on percieved quality.
That means spending the extra $50 on better interior materals and charge an extra $60 for it instead of looking for ways to cut another $10 out of an already marginal interior. It means manning a factory to make 100,000 cars at retail price instead of manning for 200,000 and selling half at break even or even a loss. This means that you don't need to pay executives of 5 comittees to decide whether or not to make a new model when a single comittee of one person from each department will do.
Focusing on market share means squat. Bob Lutz's 29% pins didn't do anything for GM.
But focusing on making great cars with good margins on them, that's what works.
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I said this from the VERY GET GO. GM is dropping it's 3RD best selling brand (Pontiac) and keeping others like Buick.
GM best selling is Chevrolet, GMC, Pontiac. Profit or not, Pontiac brings home the bucks and more sentimental value than Buick ever could.
Welcome the Fritz era!!!!!!!!!!!!
As my own edit and I don't feel like fitting it in:
GM bankrolled their future on the Volt. Whether they say it or not, the only way the programs going to be afforded is by bankruptcy and by putting all the eggs in China which Fritz said in a web-chat he didn't like himself.
I give "GMC" 2 years.
GM best selling is Chevrolet, GMC, Pontiac. Profit or not, Pontiac brings home the bucks and more sentimental value than Buick ever could.
Welcome the Fritz era!!!!!!!!!!!!
As my own edit and I don't feel like fitting it in:
GM bankrolled their future on the Volt. Whether they say it or not, the only way the programs going to be afforded is by bankruptcy and by putting all the eggs in China which Fritz said in a web-chat he didn't like himself.
I give "GMC" 2 years.
First, overall, over 50% of Pontiacs were going to fleet and rental buyers. Only the G8 and Solstice were immune.
Second, although Buick surviving over Pontiac makes no sense on the surface (and you KNOW I didn't agree with that move either), Buick is the cheaper brand of the 2 to keep. While Pontiac needed alot of money and work to build up the retail side beyond a 2 car show, Buick is a freebee because it's development and design is essentially in China where Buick sells more than it does here in the US. All GM has to do is set up a factory and make already engineered and designed Buicks here.
Third, I think GMC has alot of life still in it. It's nothing more than a Chevrolet with a different nose and better interior, but that goes a long way. You could site logic, but logic doesn't play here. The Cadillac Escalade defies logic. It runs well in the $60K range, but it's essentially a loaded $40K Tahoe. And it's a huge success. If that type of thing happens in this world, then GMC will live a very long and happy life.
I do feel GM drained a lot of their resources on Volt. There is no real value to Volt other than technology GM can sell if it needs cash. Think of it. The Car is essentially a Cobalt that will sell for $40,000. If the idea was good PR, then Toyota's $25K Prius or Honda's $20K Insight was a better deal. It certainly doesn't represent the value that Ford's $27K Fusion represents... and even that Ford sedan is getting a reputation of being cooler than the Prius of all things!
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Speaking of marketshare..has this been brought up..
http://www.rasmussenreports.com/publ...o_buy_gm_again
Only 42% of those who currently own a General Motors car are even somewhat likely to buy a GM product for their next car. That figure includes just 30% who are Very Likely to do so.
Fifty-one percent (51%) of Americans nationwide say they are now more likely to buy a Ford since that company did not take any bailout funding. Only 12% are less likely to buy from Ford.
http://www.rasmussenreports.com/publ...o_buy_gm_again
Only 42% of those who currently own a General Motors car are even somewhat likely to buy a GM product for their next car. That figure includes just 30% who are Very Likely to do so.
Fifty-one percent (51%) of Americans nationwide say they are now more likely to buy a Ford since that company did not take any bailout funding. Only 12% are less likely to buy from Ford.
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From: Irving, TX
Speaking of marketshare..has this been brought up..
http://www.rasmussenreports.com/publ...o_buy_gm_again
Only 42% of those who currently own a General Motors car are even somewhat likely to buy a GM product for their next car. That figure includes just 30% who are Very Likely to do so.
Fifty-one percent (51%) of Americans nationwide say they are now more likely to buy a Ford since that company did not take any bailout funding. Only 12% are less likely to buy from Ford.
http://www.rasmussenreports.com/publ...o_buy_gm_again
Only 42% of those who currently own a General Motors car are even somewhat likely to buy a GM product for their next car. That figure includes just 30% who are Very Likely to do so.
Fifty-one percent (51%) of Americans nationwide say they are now more likely to buy a Ford since that company did not take any bailout funding. Only 12% are less likely to buy from Ford.
This is exactly why GM doesn't need to focus on market share. GM needs better vehicles, better margins.
I will also say that I don't care about the poll. I know many people who won't buy any American brand. It doesn't matter how far the brands have come. When people are looking to buy another car, hopefully they will look at GM. It is just too soon after the bankruptcy and federal funding to ask this poll. GM might lose some short term sales, but the sales figure for GM right now aren't bad considering what is going on.
This poll also bothers me for another reason. If GM goes under because no one buys the cars, all anyone can say was that they were right. All the time and money the gov't wouldn't have invested, coming out of your pocket and mine, would be gone. So yeah for all the people who want to lose all the money.