By on October 20, 2009

Keepin' it Reale (wikimedia)

Mickey Kaus and TheBigMoney’s Matthew DeBord joined in the recent kerfluffle over GM’s market share predictions, Kaus on the side of TTAC’s pessimism, and DeBord on the audacity of hope against hope side. DeBord grabs his spade and starts digging, and it only takes a paragraph before he strikes a vast reserve of bubbling… excuses.

declining market share has been a GM reality for decades—the company at one time had so much share that it really had nowhere to go but down or into anti-trust prosecution. The Old GM was so preoccupied with holding share that it neglected what was obviously more important, profits. New GM has a reasonable opportunity to take its smaller portfolio of brands, several relatively successful new products, and given a recovery in the truck market in 2010, book some profits ahead of an anticipated pre-midterm-elections IPO.

Still, there are plenty of critics who have it in for GM, notably The Truth About Cars, which has been heralding GM’s demise since gas was 30 cents a gallon and Sinatra was headlining the Sands. (And yet … GM lives! This has to be something like being Cuba, grimly eyeing the United States across that brief expanse of ocean, waiting decade after decade for the imperial giant to finally fall.)

So grab a Pina Colada and pull up a chaise lounge, comrades… the glorious revolution waits just behind the jump!

Obviously we’re flattered that DeBord thinks so highly of our prescient foresight. After all, who would deny that GM has been in steady, unchecked decline since Sinatra last thrilled The Sands? More importantly, the comparison of GM to the United States totally ignores the reality that GM failed, went into bankruptcy and was bailed out by the unwilling taxpayers. Unless of course DeBord is making some kind of meta-point on the irony of an ostensibly Communist nation (China) bailing out our bailout-weakened federal government by buying an endless amount of US Treasury bonds. But that’s a generous assessment in light of his vague optimism on The General’s prospects.

GM no longer needs the kind of share it sustained even 10 years ago. It just needs its share to involve products that make money. GM was making money before 2005, on declining share, because it was selling a lot of profitable trucks and SUVs.

So GM doesn’t need the increased market share, but it will get it anyway. Just because it’s building a lot more cars than it can realistically sell? Where are those profits now?

If you look at what it has now, in terms of divisions, it could make money again. Cadillac, Buick, and GMC all have good profit potential based on new product introductions. Chevy is a question mark, but it also has the burden of selling more cars and trucks than the other GM divisions—and the advantage of having GM’s top-selling vehicle, the Silverado pickup. Chevy will also have the most important car of 2010, the Volt extended-range electric vehicle, a halo car if there ever was one.

For some reality-based context, take a look at this chart of GM sales by brand. Chevy’s the clear volume leader, but it’s also showing the most precipitous declines. Anyone who wants to believe that a pickup and a $40k profitless halo will turn that around is free to do so, but the theory needs… fleshing out. Meanwhile, Buick, GMC and Cadillac are bouncing along the bottom of a weak market that is increasingly willing to buy their luxury vehicles from brands like Hyundai. Add that to undeniable indications that GM is falling into the overproduction trap, and you’ve got a picture. And it ain’t pretty. The fact that DeBord agrees that Fritz should go seems to be a sign that even he knows better. Perhaps he’ll come around when GM fails for a second time.

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8 Comments on “Endorsement Of The Day: Pessimism In Paradise Edition...”


  • avatar
    seabrjim

    Dont think the truck market recovers in 2010. He can forget about that one.

  • avatar
    Lokkii

    If I’m reading that chart correctly, all the other GM brands represented (Buick, Pontiac, Cadillac, GMC)together don’t make up 50% of Chevy’s sales.
    GM will live or die on Chevy. Simple as that.

    Looking back at 2005 GM wasn’t making any money, and people besides TTAC were predicting the company’s death – long before the economic bubble burst.

    http://www.zilliant.com/downloads/Detroit_Free_Press_082605.pdf

    26 Aug 2005 – Detroit Free Press:

    “Rebecca Lindland, an automotive analyst with Global Insight Inc., a Massachusetts-based auto research firm, called the extension of employee pricing a kiss of death for GM.

    “When do you stop it?” she asked. “When do you get back to paying full price for vehicles?” Selling lots of vehicles doesn’t necessarily translate into higher profits unless the cars and trucks are sold at the right price. Through June, for example, GM sales were up 2.1% in the United States, but the automaker lost $1.4 billion through the same period.”

  • avatar
    Rod Panhard

    The reason GM, Ford and Chrysler survived the last recession is because of the sales of SUVs and Pickup trucks. And in the case of Chrysler, minvans sure helped too.

    Not only did these vehicles sell in large numbers, but they provided large margins to those who sold them. That’s why Toyota and Nissan got in the act, too.

    Since then, SUVs have fallen out of favor, partly by fashion and partly by gas prices. We’ve seen this before. Think of the “personal luxury cars” of the early 1970s, such as the once “best selling” Oldsmobile Cutlass.

    Meanwhile, pickup truck sales had been boosted by a sizzling market for homes. Contractors large and small needed pickup trucks to haul sheet rock, sacks of concrete, wallboard compound, etc.

    And we know how that turned out.

    So now, we’ve got same sort of guys runnning GM who were making their bones in the car biz after the wheels fell off the Cutlass. Yup, that’s the same guys who said, “We can’t make money on cars, so here, buy some trucks and SUVs, and by the way, we can’t make money on minivans, either.”

    Looks pretty obvious to me. Why this guy can’t see it is a mystery.

  • avatar
    DearS

    Funny funny. I’m entitled and have a right to come to my own conclusions and ask for and expect something in life. I also have a right to be wrong, and make mistakes.

    The country (most of it) is unwilling to step up and change the rate of tax afforded unaccountability. This is imo not a very clever or sustainable practice. It pretty sad imo. Although it could be worse. Just like the country is dysfunctionally co-dependent on oil, so it is on ignorance.

  • avatar
    Lumbergh21

    Still, there are plenty of critics who have it in for GM, notably The Truth About Cars, which has been heralding GM’s demise since gas was 30 cents a gallon and Sinatra was headlining the Sands. (And yet … GM lives! This has to be something like being Cuba, grimly eyeing the United States across that brief expanse of ocean, waiting decade after decade for the imperial giant to finally fall.)

    You know, maybe I’m misinformed, but wasn’t there some sort of government bailout coupled with a bankruptcy that involved a car maker that went by the name of General Motors? What would Mr. DeBord define as the death of GM? The complete erasing of the name from all records? When nobody even remembers that GM ever existed? I thought that the GM of the TTAC “Death Watch” era (Old GM) was dead as the result of the bankruptcy. No man is so blind as he who refuses to see.

    Even my brother-in-law who works for Delphi stated that he wouldn’t buy a GM product now. And, he’s not the only one. He told me that there are almost no domestic vehicles in the parking lot at work now (and that’s not because they laid off all GM car owners). When people with a self-interest in seeing you succeed have stopped buying your cars you ought to be very afraid of just how low your market share will go. Then again maybe it’s just a perception problem among the design engineers. Maybe they just don’t realize how good the products they are designing and testing are or how GM will be around in the future to service and support those products.

  • avatar
    Bunter1

    GM no longer needs the kind of share it sustained even 10 years ago.

    Hmmm, I don’t think GM has sustained any level of market share in the last 30 years. They are just data points marking the plummet.

    The chart also illustrates how little any given months sales/market share means. Fleet shipments and the toe tag sale du jour render any given data point useless. I’ll need to see share up 9+ months before I consider their plunge over.

    Bunter

  • avatar
    tparkit

    Mr. DeBord hears, sees, and speaks no Washington. To help the rest of us do likewise, this dutiful servant of power lays down a steady flow of red herrings:“I’m also starting to see some typical GM executive moves, with a Bob Lutz-Bryan Nesbitt GM, driven by PR and media, up against a Fritz Henderson GM, motivated by cost-cutting, against an Ed Whitacre GM, propelled by the notion that GM is a trustworthy entity deserving of patriotic consumer support.”DeBord is inviting us to direct our attention, worries, and uncomfortable inquiries to an ever-changing pagent of front men, pseudo-initiatives, and straw issues. Not coincidently, when GM is the only performer allowed on stage it has the only microphone. This leaves the audience with only empty questions, such as “What is GM’s plan?” “What is GM’s understanding of its challenges?” “What will GM’s leadership do?”

    The way to deal with DeBord’s intricate knot is to step back, then slice it. The way to deal with the political fraud that is Government Motors is to stop buying its cars and force it to close its doors. Nothing — absolutely nothing else — will end this raid on the American people.

  • avatar
    newcarscostalot

    Government Bailouts. So GM, in some form, survives.

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