GM eyes market gains with new models

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Courtesy of The Detroit News

Art Thibault makes an adjustment on a 2014 Chevy Impala at GM’s Detroit-Hamtramck plant.

Art Thibault makes an adjustment on a 2014 Chevy Impala at GM’s Detroit-Hamtramck plant.

General Motors Co., whose market share fell more than 10 percentage points in the decade ending in 2012, says its barrage of new products should help increase its market share over the next few years.

Last year, the Detroit automaker lost share to crosstown competitor Chrysler Group LLC and the Japanese automakers. The Japanese companies’ sales roared back, after losing to the domestics in 2011 due to supply issues following the Japanese earthquake and tsunami.

On GM’s side now are new showroom offerings, and lots of them.

Seventy percent of the automaker’s U.S. portfolio will be refreshed between the start of 2012 and the end of 2013, and 89 percent will be refreshed by 2016.

“The oldest car will be the (Chevrolet) Cruze and the (Buick) Verano, very shortly,” GM North America President Mark Reuss said in an interview last month at the New York International Auto Show. “So this is all guns blazing.”

The Cruze was introduced in fall 2010 as a 2011 model. The Verano went on sale in late November 2011 as a 2012 model.

“2013 is off to a very good start for General Motors on both a product and market-share basis,” said Kurt McNeil, GM’s vice president of U.S. sales operations, in a sales call this month. “And we’re increasingly well-positioned to compete as the economy strengthens and our launch cadence accelerates.”

The automaker has been saying it would gain market share since the 1980s, and overall has lost share, said Michelle Krebs, senior analyst with auto research site

Krebs said GM’s Chevrolet Malibu — which is getting refreshed and should be out this summer as a 2014 model — is faring poorly in the midsize segment, the industry’s largest sales segment. GM also faces stiff competition from Ford Motor Co., along with the Japanese automakers.

“It is going to be a challenge for GM to gain any market share,” Krebs said in a telephone interview.

The carmaker is seeing some results: Through the first quarter, GM’s market share was up 0.5 percentage points to 18 percent compared to the same period in 2012, according to Autodata Corp.

It’s seen growth through products such as the all-new 2013 Cadillac ATS and is coming off its best March sales month in five years.

Through March, GM sales are up 9.3 percent compared to the same months in 2012, with sales for the Cadillac luxury brand jumping nearly 38 percent.

“We’ve stated publicly that we expect to grow share this year,” Alan Batey, GM’s vice president of U.S. sales and service, said in an interview. “It’ll be a gradual increase.”

Attracting new customers

Publicly, GM executives haven’t seemed too fazed by the company’s 2012 U.S. market share drop to 17.5 percent, from 19.2 percent the year before.

Several company executives say GM is now “disciplined” on sales incentives that once were the highest in the industry. The company also is focused on growing retail sales and retail market share instead of selling cars to fleets. It has been building its average sales price and the value of cars at the end of leases, known in the industry as residual value.

Batey pointed to high rates of “conquests” — customers who are new to GM or did not have a trade-in. Overall, GM’s new vehicles are attracting about 50 percent new customers, Batey said. The Cadillac ATS has a 70 percent conquest rate.

GM could sell more vehicles to rental car lots if it wanted to move market share that way. “But we believe that would deteriorate our brand and would hurt our residual values,” Batey said.

Competition fierce

Many analysts say GM can gain share, particularly in 2014 when it has a full year of sales with new products such as the all-new 2014 pickups, the 2014 Chevrolet Impala and the 2014 Cadillac CTS.

“GM definitely has the opportunity to stabilize if not grow market share, given they have a number of new products,” said Rebecca Lindland, principal of Rebel Three Media & Consulting in Greenwich, Conn.

But GM will need to pay attention to all the new products from rivals, too.

“The landscape has never been more competitive, especially in the mainstream as opposed to the luxury,” Lindland said in a telephone interview.

So far this year, Ford, Chrysler and Toyota Motor Corp. have picked up a bit of market share, while Nissan North America Inc., Kia Motors America and Hyundai Motor America have lost share compared to the same period a year ago, according to Autodata Corp.

But GM’s new portfolio should drive its growth, analyst Colin Langan of UBS, said at the J.D. Power/NADA 2013 Automotive Forum in New York.

Langan said GM’s rate to refresh one-third of its products over the next year is “the strongest in the industry,” which should fuel share gain in 2013 and into the first half of 2014.

Analyst expects 2014 gains

Morgan Stanley analyst Adam Jonas expects GM’s U.S. market share will be “relatively stable” this year.

He doesn’t expect GM to sustain its 0.5 percentage point market share gain throughout 2013.

But Jonas sees growth in 2014.

“They’ll have more product on the ground, less disruption at the plants,” he said in a telephone interview. “That’s the year when they can gain substantial share.”

One looming issue is the weakening Japanese yen, which is giving Japanese automakers a $2,500 to $3,000 pricing advantage, Jonas said.

He’s expecting the Japanese automakers, which control 37 percent of the U.S. market, will gain a “couple” of percentage points of share through 2015 because of the currency advantage.

And car buyers could see better exterior and interior styling in the next year in Japanese vehicles, with powertrain improvements coming in the next 18 to 24 months, Jonas said.

“The Japanese are going to reinvest the benefits of the currency (advantage) into the product to improve the cost of ownership,” Jonas said.

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