GM Market Share In Reverse For Q1

Back in October, GM’s then-CEO Fritz Henderson announced that GM would make a stand on market share, refusing to allow its share of the US market to slip below 29 percent. Oh wait, that was Gary Cowger’s campaign of 2003, which saw GM execs wearing symbolic “29” lapel pins. Where Henderson actually drew GM’s market share line in the sand six months ago was

At this point about 19 percent… We’ll finalize that, but I’m not interested in going down from that

And according to the Detroit Free Press, GM actually achieved that goal in December, logging a 21 percent share based on Autodata findings. Unfortunately, things have been slip-sliding ever since. In February, GM’s share fell to 18.1 percent, and last month it fell even further, to 17.6 percent.

Of course, having Toyota fighting its way out of some bad publicity with unprecedented incentives didn’t help… except that GM’s average incentives were nearly $1,000 higher than Toyota’s. And with GM’s turnaround plan based on an 18.5 percent share of a 12.5m overall market, this share slide would be dangerous enough even without real fears that the market won’t even hit 12m units this year. The fact that this troubling performance has come at the expense of consistently industry-leading incentives does not leave one sanguine about next month’s release of GM’s Q1 financials.

Analysts smell trouble, and apparently feel no need to sugar-coat it. As Barclay’s Capital’s Brian Johnson said of The General’s March performance:

GM’s passenger car performance was materially weaker than we expected

Erich Merkle of Autoconomy never even expected GM’s market share to recover to Fritz’s line-in-the-sand level, saying:

GM for some reason always has these critical market-share milestones that they put in place for themselves, then they blow through them. The real focus for GM has to be being profitable

And sure, GM can (and probably will) cut costs to squeeze as close to a profit as possible, but IPO investors are going to want to see more than just belt-tightening. If GM doesn’t start making headway expanding its business, and do so without increasing incentives past their already-industry-leading levels, there’s not much hope of attracting the kind of investment it needs to pay back the government for its equity stake. On the other hand, GM is going to struggle to win over consumers until it is free of its political entanglements. And with decades of market share decline having gone unchecked by the words, deeds and lapel pins of GM management, it’s clear which way the momentum is heading.