General Motor’s days at number one in market share are numbered in the U.S. But sales tactics are not the problem.
On average, Americans have hung on to their current vehicles for over ten years. In the face of rising gas prices, they will be looking for more than high incentives when finally purchasing replacement cars and trucks.
Sharon Alagna, a Los Angelas resident said she and her husband focused almost entirely on fuel-efficiency when shopping for a new car.
“That was the most important thing on my list. Especially living out here,” she said.
The fact that GM relied more heavily than its competitors on incentives to move vehicles in February– especially in their Chevrolet and Cadillac brands – was a bad sign, said Joseph Brusuelas, of Brusuelas Analytics.
Brusuelas echoed the sentiments of other analysts who claim that rising oil prices will push consumers towards more fuel-efficient options.
GM is far from out of the woods, Brusuelas said. He pointed out that in February, GM offered the highest average incentives per vehicle among the top U.S. manufacturers – $3,254, with the Volt getting both government and manufacturer sponsored discounts. The dual incentive on the vehicle underscores a lack of demand for it, he said.
“If they have the right products, they won’t have to have the incentives,” he said. But the right products did not include the company’s troubled electric hybrid, the Volt.
The Volt has been slow to catch on. Just over 1,000 were sold in February, following some bad publicity and safety recalls.
In contrast, Chrystler’s average discount per vehicle was $2,363, and Ford’s was $2,795.
No matter, said Don Johnson, a GM executive. He argued that GM was in an excellent position to provide fuel-efficient options in the case of long-term hikes in gas costs.
GM’s Chevrolet brand did especially well in February, said Johnson in a conference call earlier this month. Chevy passenger cars sales had increased by 13% compared to last February, including 20,427 Chevy Cruzes, he said. Mr. Johnson attributed the Cruze’s popularity to fuel-efficiency.
In the early sixties, GM held a full 50 percent of the U.S. market share. That has dwindled over the years as Chrysler, Honda, and Toyota gained momentum in the 80’s and 90’s.
In the last ten years, GM’s market share has dropped from 28 percent to almost 19 percent. In contrast, manufacturers such as Nissan, Volkswagen, and Hyundai have seen gradual increases, despite recessions and natural disasters. These companies may gain momentum as they expand manufacturing operations within the U.S.
Volkswagen, for example, has opened a plant in Chattanooga, Tenn., effectively avoiding a loss related to exporting costs. Volkswagen has climbed from 1.76 percent of the U.S. market share to 3.39 since 2005.
“The pie is being sliced up a lot of different ways,” said Michelle Krebs, a senior analyst for Edmunds.com. “Nobody’s going to dominate.” In the long term, the best strategy will be to offer the best product, Krebs said. And, she argues, Americans have that going for them with the Chevy Cruze and Ford Focus.
