11 January 2012

GM Sales Soar

First appeared on CNN Money
General Motors is poised to once again be No. 1 in global auto sales, after three years out of the top spot.
It's a comeback that will be official when final 2011 sales figures are reported in the coming weeks.

Recapturing the top spot seemed unthinkable in 2008 when GM lost the title. At the time, the company was in a tailspin. Its very future was uncertain, and a bankruptcy filing and federal bailout loomed.

Toyota held the title between 2008 and 2010.

GM's feat is also a contrast to other U.S. industries that lost leadership to overseas competitors, never to see it return.

Cool cars from the Detroit Auto Show

GM (GM, Fortune 500) never lost the lead in U.S. sales, but its market share here slid nearly continuously for decades, from 44% in 1980 to only 19% in 2010. But for at least the last two years that trend has been reversed, helping GM quickly return to profitability in the wake of its bankruptcy.

But its home market is only part of the sales story.

It is also the largest automaker in China, which has become the world's largest market for auto sales. It sold about 2.5 million vehicles in China, narrowly edging out its U.S. sales once again, as it increased both sales and share there.

"They continue to be awfully strong in the U.S. and China. If you can conquer those two markets, you've got two-thirds of the world," said Rebecca Lindland, director of research for IHS Automotive.

GM CEO Dan Akerson downplayed the significance of the title when speaking with reporters at the Detroit auto show Monday.

"I like profitability more than I do market share," he said. "We're a mass producer, and scale matters to us, therefore we're pleased with that accomplishment."

Market share vs. profitability: In the past GM had held onto market share and its No. 1 rank by cutting prices on cars to the point where they were unprofitable. Bob Lutz, former vice chairman of GM, said worrying about their market share rank did the companies more harm than good. (Fiat 500 sales goal 'incredibly naive')

"There is absolutely nothing to be gained by being the world's biggest," he said. "I tried to tell them to say, no, it's not our objective to be No. 1. But they just couldn't do it."

But Lindland said GM can be pleased that it got back on top without that kind of deep discounting and grab for market share.

Through the first three quarters of last year, GM's 6.8 million vehicles sold was well ahead of both No. 2 Volkswagen, at 6.1 million, and No. 3 Toyota Motor (TM), at 5.8 million.

VW has reported final global sales of 8.2 million for the year, but GM should easily top that mark, analysts said.

How long GM will be able to hold onto its lead is uncertain. Toyota is is expected to post a sharp rebound this year after disruptions caused by the earthquake and tsunami that hit Japan in March.

"I don't think we've set the goal to be the largest manufacturer in the world. I think the lead is going to trade off," said Akerson. "I wouldn't count Toyota or any of our competitors out. But we're having a good run now. I'm very pleased by our product."

No comments: