Friday, August 11, 2006

GM exec: Sales slide finally over

Friday, August 04, 2006
GM exec: Sales slide finally over
Brett Clanton / The Detroit News

DETROIT -- Though still knee-deep in a turnaround, General Motors Corp. has halted a decades-long decline in its U.S. market share and may finally be in a position to grow sales again, a top GM marketing executive said Thursday.

Interest in new vehicle models such as the 2007 Chevrolet Tahoe SUV and a potential sales lift from upcoming products are helping put GM back in contention after excruciating declines in recent years, Mark LaNeve, GM North America's vice president of marketing and sales, said in an interview.

"We've stabilized share, and it's trending up," he said. "Have we turned a corner? Within the last nine months we have. Now, we have to go out and compete in August."

The upbeat assessment comes amid growing signs that a massive turnaround effort at GM is gaining strength. But GM's gains on the sales front could still be quickly wiped out by a number of factors beyond its control.

Sky-high gas prices could cut deeper into GM's all-important truck and SUV sales, rising interest rates could sideline would-be carbuyers and competition from foreign automakers could intensify.

Given the headwinds and remaining weak spots in GM's lineup, George Magliano, industry analyst for Global Insight Inc. in New York, predicts the automaker will continue losing ground.

The firm predicts GM's U.S. market share will bottom out at 23 percent by 2008, rather than hold at 27 percent, where it ended in July.

"I hope they're right," Magliano said. "But I wouldn't bet on it."

Through July, GM's sales were down 14 percent. The decline is largely due to unfavorable year-over-year comparisons with blockbuster sales last summer, when GM ran an employee-pricing-for-everyone promotion. This year's numbers also have been impacted by GM's move to reduce sales to daily rental fleets by 10 percent.

LaNeve said a truer measure of performance is retail sales to regular customers, which reflect strong gains for newly-introduced vehicles such as the Chevy HHR wagon, Buick Lucerne sedan and Pontiac Torrent crossover.

With the help of new vehicles, GM's revenue per vehicle has risen faster than the industry average this year, its incentive spending is down and the perception of its products is improving, LaNeve said.

The vehicles are at the heart of GM's plan to overhaul its ailing North American auto business, which despite the launch of a sweeping restructuring program is still in the red.

Under the program, GM says it will cut $9 billion in annual fixed costs by closing or downsizing a dozen factories, cutting 34,000 blue-collar jobs and shifting more health care costs to employees.

GM's recent sales trends are good news and should continue in the second half of the year once a newly-redesigned lineup of full-size pickups and new crossover vehicles for Saturn and GMC hit the market, LaNeve said.

"We've got great momentum in the turnaround. That said, we're still in a turnaround. We've got a lot of work left to do to get the company positioned not only to get our financial results in the black . . . but to really have a great and growing business for an extended period of time."

He also said it's not enough anymore to compare the company to crosstown rivals Ford Motor Co. and DaimlerChrysler AG's Chrysler Group.

"From both a standpoint of selling every month and the reputational issues, it's beyond just the three of us. There's at least six or eight primary players."

The shifting landscape in the U.S. auto industry was underscored last month when Toyota Motor Corp. passed Ford for the first time to become the nation's No. 2 auto seller.

GM's stock price has risen in recent weeks on the belief that its turnaround is taking hold. On Thursday, however, it closed down 41 cents at $31.20 per share in New York Stock Exchange trading.

You can reach Brett Clanton at (313) 222-2612 or

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