Opinion Desk: Maybe Market Share Matters For GM After All?38
The following article is part of the GM Authority Opinion Desk series, where our authors share what is on their minds.
I love looking at market share numbers. To me, it’s the most important sales indicator — since it is the true barometer of a firm’s performance in its industry. It is the one measure that disregards all economic factors and influences from the company’s performance and serves as the scoreboard to my favorite sport — the game of making, and selling, cars.
Every month, auto makers hit the limelight in releasing their latest sales figures to investors, analysts, and industry pundits. We report on these at GM Authority in our By The Numbers segment. In GM’s case, you’ll see Kurt McNeil on CNBC at the beginning of the month discussing the sales results of GM’s various brands, along with the growth and conquest sales. What you don’t hear much about, though, is GM’s market share or retention numbers. That’s because despite all the new products and marketing strategies that The General employs, as well as the billions of dollars it spends in attracting new customers, GM has been losing market share. Despite all of its efforts, General Motors’ share of the market has been declining — not increasing — in the U.S.
Year to date, GM holds an 18 percent market share compared to 20 percent through the same time period (third quarter) of 2011.
Numbers In Context
When GM reports increases in unit sales, those can usually be attributed to an expanding economy. As the economy expands, it stands to reason that any company’s sales will grow accordingly — regardless of what sales or marketing strategies are in place.
Increases in unit sales have traditionally been used by many companies to show that a company’s health is improving. Some might be convinced that things are on the upswing, but the danger in relying on unit sales alone lies in the management’s satisfaction in the sales increases — even in the face of the possibility that competitors are slowly grabbing existing customers and/or the undecided who are in the market for a new vehicle.
How Does One Increase Market Share?
In the automotive industry, increasing market share is so much more than having a good promotional strategy for a widely desired product. It is also about meeting industry attributes such as unit pricing, service quality, communication, and real retention programs. I am still bewildered about how little focus is placed on customer retention around the industry.
For its part, General Motors has created a VP position to manage customer retention. It has been a year now and we have seen very little from that initiative. Don’t agree? Simply walk on in to any GM dealership and tell me what is dramatically different in how you are treated now compared to three years ago, or even one year ago.
Have there been any change to the CSI (Customer Satisfaction Index) program since GM went bankrupt? That program is so rife with GM’s old ways, including bullshit reporting to management, and unfair rewards/penalties to dealerships and their employees, that it should be eradicated and rebuilt from scratch.
All of this is to point out how important it is to plug the hole at the bottom of the water bucket (customers defecting to other brands) while spending billions of dollars in marketing to fill the bucket in the first place (attracting new/conquest customers). Despite spending a significant amount of money, the water level in the bucket is not rising, and eventually, the company will pay for it when the market contracts.
Improved Product Doesn’t Mean A Thing
And while GM has made several high-profile changes throughout the organization, could it be that the arrogance at General Motors is still alive and well in the lower ranks? At the least, you may say, GM’s product has substantially improved… but truth is, everyone is delivering great product these days.
If General Motors really wants to demonstrate its health in relation to its competitors, it has to improve and/or increase its retention efforts to ensure that existing customers return. Keeping existing customers while conquesting new ones is the name of the game… otherwise, conquest sales don’t mean a thing, and more money is being wasted to attract new customers rather than retaining existing ones.
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They need innovative incentives that don’t cost them money up front. Truth is there simply isn’t the markup in vehicles that there used to be. How about something as simple as current customers are upgraded from 3/36 bumper to bumper to 5/50 bumper to bumper? If the vehicles are indeed being built “better” (and I believe they are) the net result should cost GM a lot less than the value of the normal cost of those warranties. Why do I have to come up with shit like this? I’ll forward the address for my commission check.
I’m pretty sure I have it,,,,
My question is why does Chevy still offer 3/36 warranties when Hyundai is doing 5/60? Does Hyundai believe in its products that much more?
What does a customer do who owns a Saturn wagon and wants another one? Or how about replacing that Pontiac Vibe or Chevy HHR? What does a Pontiac Solstice or Saturn Sky owner do? Why should anyone be surprised at the loss in market share as such customers migrate to brands that offer a replacement?
GM seems to have placed a lot of emphasis on its high margin products (e.g., Cadillac/Buick) to improve profitability and not on the mainstream (Chevy), which needed to expand its product line given the loss of Pontiac and Saturn. So with the loss in brands and products, so goes the loss in market share.
Ironically, the solution for the HHR/Vibe owner is as clear as the Colorado sky on a summer morning: make the Cruze hatch available in the U.S. All the engineering and design work has already been completed… it’s just a matter of building the car at Lordstown.
As for the Sky/Solstice — this is a small segment; but I predict that most of, if not all, the buyers looking for a replacement in a similar vehicle went to Mazda. Oh well.
I would be disappointed if the Cruze hatch came out without a redesign. It doesn’t seem right in the hatch area. It looks like GM took a sedan, shortened it, and then simply sloped the rear window to make a hatch. Storage space is thus lost, and the roof becomes less functional.
The Focus, Mazda 3, Elantra GT, and Impreza all look better. Of those, the 3 is above all in terms of mechanical performance. For the Cruze to compete it needs a redesign (or just offer the wagon) and possibly a diesel engine, as I don’t see GM coming up with comparable gasoline drive train technology. Even if GM did all of that the 3 would still be tops in terms of steering precision/feel. Where the Mazda 3 lags (to maintain profit for the U.S.) is in the quality of the interior — a shame, because it wouldn’t cost that much to improve it. But I think they intend to address the profit squeeze by moving U.S. Market manufacturing to Mexico. The concern there, of course, is the possible loss of Japanese manufacturing quality.
With U.S. labor costs what they are, profit margin (without giving up quality or performance) is the reason I would like to see Buick come out with something in this size/style. They might actually need to do less re-engineering to make an Opel a Buick than they would to make a competitive Cruze hatch.
No emphasis on Chevrolet?
New Spark, Sonic, Malibu, Impala, Corvette, Tahoe, Suburban, Silverado in virtually 2 years. And a refreshed Traverse.
@62vetteefp — Your list does not offset the loss in types of vehicles that were discontinued when Pontiac and Saturn were cut. This topic is about market share. The only way GM’s share can hold or increase with these losses is for the vehicles you list to make huge strides in attracting new customers to replace customers like me (a Saturn wagon and MINI Cooper owner). That isn’t happening because these cars are not offering something significant enough to draw in new customers (other lovers of sedans, trucks, and large SUVs). In fact, in my opinion, Chevy has been staying behind the leaders by about 2-3 years. (It’s new line of direct injected engines is not out yet, whereas others have been offering DI in competing vehicles for a number of years now, including dry clutch transmissions.)
Lets look at the data:
Saturn wagon-no one sells a wagon in any kind of volume today. Just a niche market. So no real market share loss there. I know there are many enthusiasts out there that lament no wagons in the market but EVERY wagon that has been introduced has failed to get any kind of volume and dropped out even though the wagons were tooled up for sales elsewhere. ie camry wagon, accord wagon, etc.
Mini cooper? Again a market so small to be barely considered a niche. GM perhaps could sell 20,000 units/year. Again no real effect on market share and a huge effect on profitability (the wrong way).
Yes GM could get some more sales by offering a product in every niche (how about a jeep type vehicle, or a 4 door convertible) but they, as other OEM’s cannot fill every niche and remain profitable.
Heck I would love to see a small roadster but again that market is so tiny Mazda can fill that market with 7,000 vehicles/year.
There is an assumption made that a longer warranty increases sales. I guess we can assume it does but is the extra cost of the two years increase the sales rate more than other factors. ie initial rebates, more vehicle content.
In my case I would rather forgo the 2 years of warranty for a cheaper price or more content. But I do not have the data to make an overall decision for all US consumers. I assume that the OEM’s do and that is why most do not offer the longer warranty. Remember there is no free lunch. The buyer is paying for that longer warranty in the initial price.
I will say that a newer OEM like Hyundai needs to do something to get people to consider their product and a longer warranty will do that. But then again Hyundai is gaining share because they can offer a product at a cheaper price due to being imported from Korea with a cheaper work force. I bet that in the future they will offer a competitive warranty (shorter) when they are considered a mainstream marque ( and that is not too far away).
As far as market share. I believe the data so far is effected by some events that could override the actual “health” of the OEM’s.
#1, the Japanese tsunami of last year greatly effected the market shares. Due to lack of Japanese product GM had a higher than normal market share than they “deserved”. As did Ford and Chrysler and other non Japanese marques. 2011 was an outlier. And now that the Japanese have product there are many buyers who are now making the purchase they held off on and Japanese marques are getting a larger share than normal. Again 2012 is an outlier. I believe it will level off in 2013 and be more “normal”
#2 GM is losing a huge market share due to the “Government Motors” stigma. If you listen to the politicians (and the blogs/commentators) you would get the opinion that a true Republican would never consider a GM product. That is almost half of the buyers in our country. Once we get past this reelection and perhaps some or all of the government ownership I believe GM market share will increase.
I do recall that GM stated that they believed that after a GM bankruptcy they would end up with a 16% market share due to a number of reasons including loss of brands. Hopefully it will not fall that far.
To answer the Pontiac/Saturn problem. First not everyone wants a chevy period. So they are not going to gain all the Pontiac/Saturn people back. For a long time there was no love between Pontiac and chevy. Chevy kept defeating Pontiacs proposed vehicles and the Pontiac purist knows it!!!! So they will purchase any vehicle but a chevy period! I am an example. My wife is leasing a 200 and her next car may be a Ford or Dodge. I see this daily selling GMC trucks. Not everyone likes or wants a chevy truck. Buicks are to expensive and still have an old persons car stigma. Chevys are to plain jane!!!
So GM you made a bad mistake now you have to live with it.
Gain market share. First the products are over priced. How can Ford build pick ups for less and have more on them? Ford seems to be the innovator in trucks and GM is still the follower. This applies to all of GM. Simple GM needs to make cuts… starting at the top! Put car people, engineers back in charge. If you look back when bean counters started running GM it has been on a down hill slide. GM’s vehicles need some excitement again. It is missing.
“To answer the Pontiac/Saturn problem. First not everyone wants a chevy period. So they are not going to gain all the Pontiac/Saturn people back. For a long time there was no love between Pontiac and chevy. Chevy kept defeating Pontiacs proposed vehicles and the Pontiac purist knows it!!!! So they will purchase any vehicle but a chevy period! I am an example. My wife is leasing a 200 and her next car may be a Ford or Dodge. I see this daily selling GMC trucks. Not everyone likes or wants a chevy truck. Buicks are to expensive and still have an old persons car stigma. Chevys are to plain jane!!!
So GM you made a bad mistake now you have to live with it”
Both Pontiac and Cheverolet are/were the same. There were no “rival groups of engineers for Pontiac and Chevrolet” that were constantly at war with one another.
There were only GM engineers who we tasked with projects that benefits GM as a whole. That’s why there’s a parts bin.
Frigg, you’re trying to make it sound like Pontiac vs. Chevrolet is like East Germany vs. West Germany; this isn’t the 1960’s and there isn’t any inter-brand war.
Get your head checked.
At one time, GM had 51% of the US market, maybe ’66??? It’s been downhill ever since. It has always been about feathering one’s own nest and not about building the company. Of course the arrogance is still there. It has always been a battle between the bean counters and the car guys. Every time a bunch of car guys start to influence decision making in the company, they get beaten back or retired early. I was manager of the Gen III/IV engine development team and it was a constant battle to innovate. When I designed and built a clandestine Gen III V10, they almost fired me for going outside the program parameters. There’s no room for the Duntov’s of the world.
Pics or your V10 never happened.
Read GM High-Tech Performance September 2002 Volume 8 #5 pp 19-22. The picture is on the cover and lots of pix with the article. Ask me anything and I’ll give you details. You can take it to the bank!
I suppose next you’ll tell me I don’t own a ’87 Buick Grand National. Check my web-site for more pix and I can be found on Face-book also.
Market share is not the end all to tell if a company is healthy. GM had 25% market share all the way to Bankruptcy, same thing with Ford (although they mortgaged the farm to stay afloat) and Chrysler. GM realized this and shifted focus to increasing margin and transaction price and it is showing. Now with 18% market share they can make money when a few years ago at 20% they were losing money.
Everyone likes to quote the 50% market share of long ago, but that was a totally different world. The Big 3 owned the auto market, there was not one single transplant and the other makers couldn’t compete by importing. Our government, wanting a free market, allowed (and encouraged) the foreign makes to build plants here, basically giving away any competitive advantage the Big 3 enjoyed.
I also disagree with the authors assumption that GM is not working on customer satisfaction. GM has hired executive level leaders to work on the customer experience and although there are still pockets of old schoold dealers, the trend is positive with regards to the point of sale response.
And finally, in regards to the statement that great product doesn’t mean a thing and everyone is delivering great product, just ask a car dealer and they will teill you what it is like trying to sell junk.
Apparenlty Ford agrees that great product doesn’t mean a thing. We’ll see how that works for them…
“Ford Motor Co. plunged for the second straight year in Consumer Reports’ survey of auto reliability and now ranks near the bottom of the annual scorecard.”
“The Ford brand finished 27th out of the 28 brands rated in the latest report, after dropping to 20th from No. 10 last year. Lincoln fell to 26th from 14th.”
“No. 11 Cadillac was the highest-rated domestic brand, gaining 14 places. General Motors’ other brands — GMC (13th), Chevrolet (15th) and Buick (21st) — all improved as well.”
Read more: http://www.autonews.com/article/20121029/OEM06/121029900#ixzz2AndyIoLx
Bejma – maybe you should start singing the praises of Hyundai now since they and GM are trending to switch book ends in the market share game. I guess Hyundai should be happy with their market share right?
Is there anything at GM that isn’t perfect in your eyes?
Hylton – I deal with the Korean auto market and their suppliers everyday so I understand that they make a nice looking, well optioned vehicle but in no way are these cars going to be around for 150,000 miles. Ever see a 5-7 year old Hyundai on the road?
And yes, there are many things at GM that are not perfect. Being a GM employee I think I have a very good perspective on what they are as well…
– Still too inefficient in product development. Too many people taking too long causing slow reactions.
– Too many powertrains but we are working on chopping that down
– Margins too small on most vehicles, again, we are working on it
But I also see a lot of GREAT things we are doing as well…
– Equaling the iconic 3 Series with a brand new from the ground up vehicle
– Being the only automaker to produce a B-Segment vehicle profitably in the US.
– Reaching out to help our customers through industry leading involvement is social media
– Utilizing the Disney customer service model to train and improve the dealership experience
– Industry leading 5 year/ 100,000 mile powertrain warranty
I like some gm cars, im not a huge fan, and I think for some is the gm fan boys who bash every other brand and i think it turns some off. and I do at times feel the same way, every car brand has it’s advantages and disadvantages, as for hyundai i used to think they are crap and I do see a few older Hyundai’s with over 130k.
They still have a lot to prove, especially in power and handling.
With consumer reports it seems most of it has to deal with their infotainment system which consumer reports hates. they don’t give a cruze a great rating either and it depends on each group it seems if they do well or not. for me I’d love a hatchback. more hatch backs the better. RIght now im choosing between a ford focus, a vw golf 2.5 or a hyundai elantra gt. I test drove a cruze a few years ago and I like most things about it except power, and the transmission shifted jerky, but I hear they fixed it in 2012.
and all I mean is a blind to the issues or anything good about any other car brands. and a lot is still the stigma from the 90’s etc, and I do see gm is getting better, just not many fit my needs for now. but I think more people will see gm is improving and that’s just bring out better and better cars then what they made before. Consumer reports does do a good job for cars,
I don’t always think they do, look about each brand how they review them. and maybe for the next cruze they can offer two or three different power trains for us. a turbo diesel and a economical engine and then a performance variant.
Alex and crew.
I will say I am very disappointed with the tone of the article as written. I do realize it was prefaced with “opinion”. I did not want to say anything earlier because it is your site and your writers can write what they want. In the past I thought they were neutral and fair and wrote factual articles. However after the above comment from the writer I no longer feel that way. The author obviously has a strong opinion against GM and it came out strong. However per his response “Is there anything at GM that isn’t perfect in your eyes?” there is a combative tone and I feel that was not here in the past from your writers.
I guess that is fine if that is the way you want this forum to go. (see left lane news for an example)
Sorry 62Vette but you are sadly mistaken. I own GM vehicles and am a GM enthusiast. My previous response to Bejma was because I have read many of his replies on other sites and wanted to hear balance from him. His really appreciated his reply.
We try and provide something for all enthusiast and that means not just “sunshine stories”. There are hundreds of sites for that. My articles are always designed to get people to THINK and SHARE, That’s something we need more of.
We used to be such a tolerant society when it came to other peoples ideas and opinions.
My response is the same. Your response was combative. And as a journalist that used to be unacceptable. But again you wrote as an opinion and anything goes on the internet today.
And I do not know where the “sunshine stories” on GM are.
Here are a few for you 62vette, but you are correct, they are few and far between…
I really meant where the commentators are not combative.
I come to GMAuthority for GM news. I really get tired of all the bashing of GM for everything from how their 76 Grand Prix had a bad head gasket to how the government has stock in GM and will never buy.
I want news relative to today’s GM. I know GM is not perfect but it is a company run by real Americans, with workers from America. It is not a nebulous entity.
Ok, gotcha now 62. I agree and spend most of my time just defending GM on the other sites (hence Hylton’s opinion of my other posts on other sites). Fortunately I have GM feeding us positive news on our internal sites all the time. We even have a FaceBook style internal site for us to comment among employees on what we have done and what we can do better…
I thought your editorial was thoughtful and well-written. Frankly, I’m surprised at the negative comments. Different strokes!
Agreed. I’ve known Hilton for a few years now on a personal level and you will not find a more devoted fan of GM. That said, both he and I WILL call a spade a spade and not regret it. There are no rose-colored glasses in play with either of us. Hylton’s article here is laid out exactly as it should be IMO. This is “where we are”, this is “where we were”, and then the question of how we get back there with a reasonable game plan and/or how far towards there do we really want/need to get? Seems pretty forward and concise to me. My .02
Thank You Don. The enthusiast community has so much to offer General Motors and it’s important to hear their ideas and concerns.
T. Bejma – I do value your comments here and there and always read your thoughts whenever I see your name. I always appreciate the insight. Thank You for speaking out!
I read about the GM V10 about seven years ago in GM high-tech performance. Search the web for GM V10. Ford and Mopar needed V10 engines because their big block V8 we’re crappy to start with and with the emissions regulations of the 90s they were worthless. The big block Chevy’s still had some life left in them. And now with the power output of a small block and a Duramax they are not needed anymore.
When you drive by dealerships, what are they showcasing, USED CARS. There are so many used cars on the market. Every dealer in my area has all the used cars in front and all the new cars in back… Dealers are focused on selling used cars…
@yabadabadoo that’s because dealers make significantly more on a used car than they do on a new car.
A lot of good suggestions above, probably all worth consideration. From my viewpoint I see excellent products in the GM divisions, probably best in years. Yes there are a few missing.
My family wants to own a new Equinox, probably the LTZ. But we don’t see good color selections. Interior and exterior colors are very limited. Is this typical throughout the GM line? Presentation is important, its difficult to get get excited about gray and pewter colors. We’ll probably get a 4 cyl to get better gas milage. Where is the power boost option? Chevrolet lags on providing some of the new hot options.
Price? Why do we have to pay more for crossover vehicles like an Equinox than an Impala? Is that really fair to charge more? Lower prices on the trucks, SUVs and crossovers would probably sell more.
LOL, yes if they lowered the price on trucks, SUVs and Crossovers they would sell more. However they also cost a whole bunch more. Just compare the weights of the vehicles and the mass cost alone tells you why they cost more.
Interesting as a reliability Auditor in GM we were hearing this samo samo and I retired 20 years ago. People driving their car in floods 3feet deep and going to GM to replace the motor and today just hitting the internet to let people know GM would not replace my motor. This kind of helps knowing what tree it hit or what he did that the motor let go. Then you have the guy that baught a Sky at 19 he marries three kids nagging wife and he wants to get another Sky, I can answer that too.What would Gm have to do to make every one a repeat customer ,hope their life is a long one and the Company is still building cars.