GM has a tough row to hoe in 2010, with the launches of key products like the Cruze and Volt going on sale, an IPO to worry about, and a sales slide (down 30 percent for 2009) to reverse. Still, according to GM’s new North American boss Mark Reuss, navigating the congressionally-mandated dealer arbitration is the top challenge of the coming year. At a speech last night, Reuss told reporters from Automotive News [sub] that:
I welcome this as an opportunity for GM and the dealership network to go through a change in our network with integrity,
As opposed to the arbitrary bankruptcy-era dealer cull?
According to Reuss, the other challenges on his list have more to do with the bread and butter of GM’s business, including “marketing GM’s vehicles and brands and improving customer relationships so that Americans have enough confidence to buy a GM model.” Reuss explains that “that equals profitable retail share growth.”
Still, as TTAC has reported, and Reuss confirmed to Bloomberg, profitable retail share means fewer discounts, although The General is still dropping prices on such allegedly “hot” cars as the Malibu and CTS sedans. Is there a difference between dropping a price and putting cash on the hood? If Reuss thinks so, there’s been nobody to ask him yet.
Meanwhile, GM is still addicted to incentives, using cash on the hood to move new models, old models, strong sellers and old dogs. Until that gets fixed, bringing up transaction prices while retaining volume remains a challenge that should at the top of any GM exec’s list of things to do in 2010. After all, bloated inventories and forced discounting is the biggest strain on relations between GM and its dealers, according to executives from AutoNation and Group 1 dealer groups speaking to Automotive News [sub].
Instead, GM is looking at more production to reach what Sales Boss Susan Docherty describes as an ideal of “at least” 60 days supply of vehicles like its Theta-platform compact CUVs. BusinessWeek reports
GM used to “refuse to add capacity” for specific models, Lutz said. “This is why we have never been able to add market share, because we wouldn’t roll the dice and go with the winners.”
Perhaps, but overproduction also caught GM in the brand- and market share-destroying cycle of inventory binges and incentive-driven purges. Given the uncertainty around the larger auto market for 2010, and GM’s market share, erring on the side of caution might not be a horrible idea.