The Government Accountability Office issued a report on the U.S. Treasury’s investment in General Motors (and Ally Financial, the former GMAC credit arm of GM) which says that the automaker has improved since 2008 but that there still are concerns about competitiveness and market share as well as pension and labor costs. “Although GM’s financial performance has improved significantly since the company initially received federal assistance, questions remain about competitiveness, market share and costs,” the GAO said.
While GM sales were up 15% between 2010 and 2012, the North American market overall grew by more than 23% so GM lost market share. “GM’s North American market share generally has declined,” the report said. “In 2008, GM reported capturing 21.5 percent of the North American market, compared with 16.9 percent in 2012. GM reported that its North American market share was 17.2 percent through the second quarter of 2013.”
The report also said GM’s negotiations with the United Auto Workers when the current contract expires in 2015 will be key to the company’s future. “GM’s ability to remain competitive will also depend on its ability to continue to control costs, in particular its labor costs. Labor costs refer to the costs that GM incurs to pay workers to build its vehicles at factories in the United States and elsewhere. Through its restructuring, GM lowered labor costs, in part by reducing its workforce and making more efficient use of its remaining workers,” the report said. In addition to labor costs, funding pensions could have an impact, “GM’s large pension obligations could have a potential impact on GM’s costs.”