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GM expects to post first U.S. sales gain in 21 months

GM expects to post first U.S. sales gain in 21 months

Chrissie Thompson
Automotive News | October 28, 2009 – 12:40 pm EST


DETROIT — General Motors Co. has a “good chance” of posting a year-over-year U.S. sales increase for October for the first time since January 2008, its chief sales analyst said today.

Mike DiGiovanni, executive director of global market and industry analysis, predicted that the seasonally adjusted annual sales rate for the U.S. industry this month would reach 10.5 million light vehicles. Aside from July and August, when demand was spurred by the federal cash-for-clunkers program, the sales rate has not reached 10 million units since October 2008.

“It’s still pretty bad. This is still levels we haven’t seen since the early ’80s,” DiGiovanni said in a meeting with reporters. “But clearly it’s better than where we’ve been.”

GM’s sales plunged 45 percent last October, the most of any of the top six automakers.

GM expects a 20 to 21 percent market share this month, three percentage points ahead of Toyota Motor Sales U.S.A. and four points ahead of Ford Motor Co., DiGiovanni said. That would be in line with GM’s 20.9 percent September share. The company’s share of sales to individual customers will be 19 to 20 percent, DiGiovanni said.

Also at the meeting, Susan Docherty, GM’s vice president of U.S. sales, pointed to GM’s newly launched models as drivers of the company’s sales. For instance, the Camaro, introduced this spring, has not outsold its competitor, the Ford Mustang, since 1985, she said.

But the Camaro, last on the market in 2002, has outsold the Mustang four months in a row. It could overtake the Mustang as segment leader by year end, Docherty said. Through September, the Camaro had sold 39,151 units to the Mustang’s 51,680.

Older inventory

Sixty-five percent of GM’s current inventory is 2009 models, while some of its competitors have between 60 and 80 percent 2010 models, Docherty said. That’s partly the result of a conscious effort by the company to build pickups and SUVs longer than its rivals did this year, she said. DiGiovanni said that strategy allowed the company to price its vehicles lower than competitors.

The automaker’s inventory includes 12,000 Pontiacs and 10,000 Saturns, Docherty said.

GM plans to determine optimal inventory levels on a nameplate-by-nameplate basis, Docherty said. For instance, GM will shoot for a 60-day supply for the Lacrosse but at least a 95-day supply for full-sized pickups with several body styles and box lengths, she said. GM may keep supply of hotter products as low as 40 or 45 days, she said.

Right now, GM is below its targets for the Chevrolet Equinox and SRX crossovers. The SRX has a 20-day supply and the Equinox a 10-day supply, Docherty said. GM is adding a third shift to the Ingersoll, Ontario, plant to make more Equinoxes.

Leasing grows

After its return to leasing in August after a yearlong hiatus, GM’s lease penetration was 0.2 percent that month. That grew to 1.9 percent in September and should hit 2 to 2.3 percent this month, Docherty said. Her goal is to keep the company at 7 to 10 percent, she said, down from 20 to 22 percent before GMAC Financial Services backed out of the leasing market. To compare, Docherty said, Toyota typically has lease penetration of 11 to 15 percent.

“I don’t want to be overreliant on leasing,” she said. “The minute you do that, you start hurting your residuals.”

Docherty said she hoped GM would become the industry leader in residual levels, as poor resale values were sometimes a reason for consumers to avoid GM purchases.

GM has tried to improve its overall image in buyers’ eyes via its “May the best car win” campaign, coupled with its 60-day satisfaction guarantee. GM has sold 142,000 vehicles since it started the return program in September, Docherty said.

So far, 449 consumers have opted for the ability to return their vehicle, instead of accepting a $500 discount. Out of those 449, 49 people have begun the process of returning or exchanging their vehicles, Docherty said. Four vehicles have already been returned: an Equinox, a Tahoe, a Silverado and a Malibu, she said.

GM Vice Chairman Bob Lutz said two weeks ago that only one customer had returned a vehicle so far, exchanging a manual-transmission Corvette for an automatic. But a further look at the situation showed that the dealer had simply taken care of the customer, who didn’t take part in the return program, GM spokeswoman Katie McBride said today in an e-mail.

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