GM market share falls but pricing strong

April 13, 2012
GM market share falls but pricing strong
By MELISSA BURDEN / The Detroit News
General Motors Co.’s 17.5 percent average U.S. market share during the first quarter of 2012 hit its lowest level since 1922, according to an analyst report issued Thursday.

But Morgan Stanley analysts Adam Jonas, Ravi Shanker and Yejay Ying said they aren’t concerned about the low, and neither is the Detroit automaker.

“The old GM would pull out all the stops to hold onto any amount of market share,” according to the report. “The new GM will take good pricing over market share any day of the week.”

At the end of 2011, GM held a 19.6 percent market share in the U.S. A decade earlier, at the end of 2001, GM’s U.S. market share was 28.1 percent.

GM has been pulling back on incentives and fleet sales, such as for its Cadillac brand, to bolster residual values and image.

The automaker also said during a March sales call last week that pickup sales are expected to be higher in the second half of 2012, and it has several new products coming out later in the year.

“Over time, we have the vehicles coming and the strategies in place to profitability grow our share, but we don’t give share forecast because there can be so much noise in the system,” GM spokesman Jim Cain said Thursday.

According to Morgan Stanley, pricing is strong for GM. It is refreshing many models; its retail sales are increasing; and shares in segments where the industry is seeing lots of sales, such as the small-car market, are stronger.

“GM’s transition from a share-driven company to a product-driven company is evolving faster than consumer (and investor) perceptions can keep up,” according to the Morgan Stanley report. “This will lead to lumpiness on monthly share results as GM’s strategic compass finds its true north.”

The moving trend toward cars could start to take a few tenths of a point off GM’s market share, GM’s vice president of U.S. sales operations, Don Johnson, said during last week’s sales call. But he said GM will continue to be competitive on pricing in the market.

“As we continue to see the strength in (Chevrolet) Cruze, as (Chevy) Sonic continues to grow, (Buick) Verano continues to grow, the new products — introduction of (Cadillac) XTS and (Cadillac) ATS — we think that we are going to continue with our strategy, which is as we get new products out, to price them to reflect the value they have in the marketplace, again, making sure that we are competitive, given what our competitors are doing in pricing and incentives and given the relative age of our vehicles,” Johnson said in the call, according to a transcript.

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