Has GM Changed Its Tune Yet? 9 comments
-
Font Size:
-
Print
- TweetThis
Key quotes from GM Corp.'s Global Sales Call: (GM)
In terms of our lead over our number two competitor [Toyota] in all those years of which Ford was the leader... We've maintained a sizable lead over our number two competitor at 5.6 share points, that's 760,000 units. We exceeded Toyota in the US market in 2008.
So, despite some of the things that came out in the discussions with Congress about Americans not wanting to buy American vehicles, I would say this data pretty much put that to rest.
Are they saying: Everything is ok now, let’s go back to relying on SUV’s and gas-guzzlers?
Because of low energy prices in December, we did see a swing back to traditional trucks and crossovers away from cars. Cars were down about 2 share points this month in terms of retail mix December over... One of the interesting things that we saw the run rate in December for our large pickups was 18% higher than in November, and large SUVs and large deluxe SUVs was up 68% in December over November.
So clearly, we are seeing a pattern where with lower energy prices and with some of the credit challenges for people buying at the lower end of the market, we are starting to see a swing back somewhat to traditional trucks and crossovers. I would say overall the shares now between cars, trucks and cars are above where they were at the beginning of 2008.
There is no question that the low gas prices are helping truck sales. I mean, it pretty much cut the spigot off on truck sales in the first half when oil hit $147 a barrel. Second thing, relatively speaking, some of the large SUV and mid-SUV truck buyers as well as some of the fully loaded full-sized pickup buyers, they tend to be a little bit more resilient in terms of having access to credit than the low end of the market, small compact buyer. They are being squeezed out. So, on a relative basis, we are seeing larger trucks, stronger as a share of the market.
In the truck categories and… the full-sized pickups, full-sized utilities, we held share or in the case of full-sized pickups had a slight share gain… So if we can hold shares, and [the] truck market firms back up... and we can gain share in other segment. That's really our plan, to become more profitable and gain share in the passenger car and crossover segments where we had lost a lot of market position over time.
Ford agrees that there's an uptick in trucks and SUVs but that's after slashing truck production. They also say they need fewer cars and cross overs-- which is exactly the direction GM has decided to take: From Ford Motor Co.'s December Sales Call: (F)
In the first quarter, the 430,000 units is 125,000 cars, 50,000 fewer than the fourth quarter but 305,000 trucks and that would include full size trucks and vans, SUVs and CUVs... Recall in June we slashed truck production in the second half of the year and increased car production. Well, several things have happened, incentives, gas prices have gone down since that point but in effect, right now we need more trucks and we need fewer cars and cross overs, for that matter.
Q: Just as gas prices are falling do you think that poses some risk to your product plan which is to some extent based on more fuel efficient products?
A: All of us at Ford are convinced that ultimately fuel prices is going to escalate once the global economy comes back, whenever that is.
The drivers that we see, the customers we talk to, they are customers that need a truck. Fuel price, is that stimulating demand? No, because the volume is staying about the same, the industry is just coming down so the percent of industry is going up.
There are GM offerings, but has the mind-set changed? If they're thinking12 million cars, 300 Hybrid Escalades is not a big amount. (Continued below from GM's Global Sales Call):
Our new compact crossover is the Chevrolet Equinox and a GMC compact crossover that is also coming. These are going to be vehicles that are going to get 30 miles per gallon. Clearly, in the heart of where that market is, in terms of fuel-efficient vehicles, it will be among the leaders.
Two of the 30 mile per gallon plus vehicles in Chevy channel Cobalt and HHR, while down slightly for the calendar year, gained considerable share.
Escalade was very weak in the first Q1, Q2 really came on strong, started gaining ground in Q3 and really had a great fourth quarter with Cadillac Escalade and I believe we delivered over 300 Hybrid Escalades in the month of December, which is a fairly good number.
Incentives:
The Japanese are being very aggressive on lease programs… I think Camry right now is $3500 on it, that’s a big number for Camry.
What [we] don’t want is to have to spend incentive money to correct inventory problems. And we've had to do some of that in the past. We had to do a little bit that in December and even though inventory at a nominal level, historically very low, on a day supply level is relatively high because the industry fell off.
At our volume level we're out there, we're not price competitive... We've got to be somewhat price competitive on our new Malibu.
Lastly, just a funny exchange:
GM exec Mark LaNeve
I keep getting releases from your [office.] Don’t you take any time off?
Jeff Green - Bloomberg
Not if I can help it.
Mark LaNeve
Maybe, you should.
Jeff Green - Bloomberg
Well, if you guys can just stabilize I can take some time off.
Mark LaNeve
Okay, we’re getting there.
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 9 comments:
Will someone let these dopes in on the fact that Prius sales have TANKED, that the hybrids that made little sense at $4.00 a gallon make no financial sense at all at $1.75 a gallon?
Some people need trucks. (Was your driveway plowed by a Prius?) The problem with truck sales is trucks last over 10 years. In tough times they can hang on to their trucks a while, but that just pents up demand.
300 Hybrid Escalades? Wow, they found 300 people who want a $60,000 vehicle and yet want people to think they care about the gas they use. Good for them.
Look at their car sales. The Malibu (midsize) and Impala (full size) cars are way up. Why, because they get good gas mileage without being a little toilet.
My greatest fear for GM is that with these loans they will be forced to build the little crap boxes that noone buys and it will run them out of business.
Great research, thanks!
I'm glad you're looking at the auto industry. I value your insights.
One thing that struck me as I read your excerpts is the smugness (hubris) of the GM commentator. As if the company isn't on the brink of bankruptcy, but that the important thing is that they apparently gained market share over Toyota.
With the recent uptick in fuel prices (albeit far lower than last summer), wouldn't it make sense to continue to develop fuel efficient vehicles for sale in 2009 and 2010, rather than rely on the already flawed business model that emphasizes trucks?
The company didn't talk about profits per vehicle, didn't talk about the evident weakness in the product line for mid-sized sedans, continued to gloss over the fact that it produces subcompacts at a loss, and still lags Japanese, Korean and German makes in customer perception, despite improving quality over the past 5 years.
It looks like more of the same from GM.
Ford, on the other hand, appears to be on the right track. The new mid-sized sedan (Mondeo) looks to be a truly world-class entry into the Camry/Accord realm, and will cost less to make because of its global platform. (The vehicle is already sold in Europe.)
I think that GM's share will continue to sink, notwithstanding the comment in the conference call. And when the company returns to Washington to get even more bailout money, questioners will find that nothing much has changed.
ATB,
Bill
I second BilldDrummer. You are doing a great job with your coverage. It's so fresh to read analysis from a thoughtful person without an agenda. SeekingAlpha and we readers are lucky to have you.
As for the article, I also agree with Bill. I actually read the entire conference call transcript and also found the GM reps to be annoying. All this talk of run rates, and retail vs. fleet, and unit volumes. Why no mention of incentives, aka discounting? Won't those ultimately have a huge effect on the revenue reported? These GM sales guys love to trumpet their increased unit sales, but there is absolutely NO mention of the costs incurred to move those units.
Personally, I find this presentation to be disingenuous. The conference call is little more than PR spin, IMHO.
Keep up the great work.
----another grateful reader
HomeyDDogg-- thanks for the good word.
Judy
Ford steered away from crossovers? Recently introduced were:
Ford Edge / Lincoln MkX
Ford Freestyle / Taurus X
Ford Flex
Lincoln crossover coming next month.
All get 16 or less mpg.
To be fair and balanced, GM is full of garbage when they brag about 30mpg. That is EPA highway, which means 47mph average with no stops. Under those conditions, my overpowered guzzler can pull 22, and my Civic 42... 30 is no big deal.
Has GM changed its tune? When they eliminate the last of their 22-year old transmissions and put their lineup on a diet (5000lb wagon/crossovers that get 15mpg????), then I will accept that yes, they can change.