The Obama administration has been picking winners and loser and GM is a huge loser for the US taxpayers.
General Motors finished 2012 with a 17.9% market share in the US and is expected to repeat the performance in 2013 according to a Bloomberg report. The number is at the lowest point it has been since 1924. So what is behind the dismal numbers at GM that sees the company performing at 88 year lows?
Before speculating on why GM has lost so much market share to the competition, I must point out the technicality that the company has actually only been in existence for 3 1/2 years, so we are comparing market share to “Old GM.” “New GM” came into existence in June of 2009 after it filed for bankruptcy and reemerged as a company that was majority-owned by the government. Since then, GM proponents will point to historical performance comparisons to Old GM when convenient (as if the bankruptcy never occurred) even as they absolve themselves from any past litigation since they are technically a new company. To clear up the technicality we’ll say that US market share for “GM brand vehicles” are at an 88 year low. Now that that’s cleared up, we’ll move on to why.
GM US market share was once as high as 51% in 1962 and at 31% as recent as 1997 according to the Bloomberg piece. Even during 2008, the last year for GM prior to its bankruptcy, the company held a 22.6% market share in the US. The market share has had a huge drop-off of about 20% since just that time. Obviously, the Obama Administration’s orchestrated bankruptcy has not addressed the key issues plaguing the company.
The bottom line is that GM is losing ground to competitors when it comes to building the vehicles with the most appeal to US consumers that offer the best value. The fact that much of the lost market share came after the government’s intrusion can not be ignored. There are a few reasons for this.
First and foremost, GM seems to have lost the focus on producing quality vehicles in segments that are most important to American car drivers. Since GM’s emergence from bankruptcy with Obama-appointed management, all the hype and much of the marketing budget seems to have gone towards the money-losing and low-selling Chevy Volt. Just think about it, how much have you heard about or seen advertisements on the Chevy Malibu (which competes in the highest selling mid-size segment) compared to the Volt? I have to believe that the lack of focus on the more important gas-powered conventional vehicles has contributed to GM falling behind the competition.
Management at GM does not seem to be catching on to the cause of the problem as they seem to be doubling down on the politically-popular green segment as more plug-in electric models will be offered even as the company loses market share elsewhere. GM has even admitted a lack of market for the Volt, but they continue to try and manufacture demandthrough taxpayer subsidies and short term, incentivized leases that carry artificially low monthly payments. The company is losing market share in segments that see top performing cars selling over 20,000 per month as they take credit for having the number one selling plug-in vehicle in the Volt, which averages sales of a bit over 2,000 per month. Adding to the perplexing strategy is the fact that the Volt loses money for GM shareholders (in addition to costing taxpayers $7,500 a pop) with every vehicle sold.