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Title: GM’s Global Resurgence to No. 1 Symbolizes New World for Automakers: Cars
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2011- ... izes-a-changed-world-cars.html
Published: Nov 9, 2011
Author: David Welch
Post Date: 2011-11-09 11:11:17 by Brian S
Keywords: None
Views: 2341
Comments: 4
It’s not just Toyota Motor Corp. (7203)’s recalls last year or Japan’s earthquake driving General Motors Co. (GM) back to being the world’s largest carmaker. Nor is it completely to GM’s credit. What’s really happening is a historic shift in the car business. This year, GM is poised to retake the mantle as No. 1 automaker that it fumbled away to Toyota in 2008 as the Detroit giant careened toward bankruptcy. With 6.79 million sales through September of this year, GM leads Toyota by 1 million vehicles. Germany’s Volkswagen AG (VOW) is the surprising second with 6.17 million vehicles sold this year. GM’s revival has cut short what seemed like Toyota’s destiny to take the throne from the old, complacent king. That victory lasted three years, giving way to a battle royale that now includes VW. The industry has taken a tectonic shift as GM rebounds and Toyota reflects on whether its race to be No. 1 was wise, said Harvard Business School professor Willy Shih. “It’s a rather remarkable recovery given the shape GM was in two years ago,” Shih, who has written on restoring American competitiveness, said in a phone interview. “GM lost a generation of customers. To win some back is an achievement.” GM said global sales have risen 9.2 percent this year and has earned fatter profits than it has in more than 20 years. The Detroit-based carmaker earned $6.17 billion last year and $8.47 billion in the first nine months of this year. The Obama Administration’s Auto Task Force, which oversaw GM’s $50 billion bailout, figured the company could make big profits once freed of its massive debt and high labor costs. The group didn’t see GM retaking Toyota this soon after its June 1, 2009, bankruptcy filing, said former member Harry Wilson, now chief executive officer of consulting firm Maeva Advisors LLC in Scarsdale, New York. “It’s not something we counted on,” Wilson said in a phone interview. “Being biggest was not a goal for us. It was being profitable so they could survive and grow.” The U.S. still owns almost a third of GM. The government would have to sell its stake at an average of $53 a share to break even. GM fell 7.2 percent to $23.24 at 8:59 a.m. New York time before regular trading. GM hasn’t solved all of its problems. In the U.S., the company spent $3,070 per vehicle on incentives last month, second only to Chrysler Group LLC among mainstream automakers, according to market-research firm Autodata Corp. in Woodcliff Lake, New Jersey. The automaker also has been sacrificing margins for sales in China. GM’s China deliveries rose 10 percent in October from a year earlier helped in part by price cuts on its Wuling minivans. GM’s earnings before interest and taxes relative to sales lags behind those of Ford and VW, according to an analysis by Morgan Stanley. CEO Dan Akerson is pushing for cost reductions to improve GM’s EBIT margins. Net income fell in the third quarter to $2.11 billion from $2.16 billion a year earlier. The culprits were losses in Europe and lower production of GM’s more-profitable trucks and SUVs and higher production of lower-price small cars, Chief Financial Officer Dan Ammann said in a media briefing. GM also has been helped by Toyota’s bad luck, said longtime industry watcher Maryann Keller, principal of a self-named consulting firm in Stamford, Connecticut. The earthquake in March disrupted production in Japan and allowed GM, VW and other competitors to snap up plenty of buyers. Floods in Thailand shut down suppliers, making it difficult for the Toyota City, Japan- based company to recover production lost earlier in the year. Still, GM may be able to keep the sales crown even after Toyota recovers from the effects of the earthquake and floods because Toyota buyers have had reasons to look around, Keller said. Last year, Toyota recalled millions of cars because of problems with floor mats and a sticky accelerator pedal. That damaged its reputation as the vanguard for quality, she said. Toyota’s sales of 8.42 million vehicles in 2010 exceeded GM’s by 30,000. It has sold 5.77 million through September this year, 8.8 percent fewer than a year earlier. Winning market share back won’t be as easy for Toyota as it was over the past two decades, when Detroit’s Big Three all had financial problems and quality issues, Keller said. “Toyota won’t gain back all of the share it lost this year,” she said. “It was easy for the Japanese to steal buyers when their primary competitors in the U.S. put out low-quality cars. The competition has gained on them.” There are simply too many good brands selling quality cars for any player to dominate, Keller said. Besides the three giants, Renault SA (RNO), Nissan Motor Co., Ford Motor Co. (F), Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) all are selling competitive cars and have the financial strength to invest in technology, new models and marketing. Alliance partners Renault and Nissan have sold a combined 4.93 million vehicles through September this year. Hyundai and its partner Kia have delivered a total of 4.73 million. Ford has sold 4.27 million. Volkswagen has a stated goal of becoming the world’s largest carmaker. On October 14, Christian Klingler, group board member for sales, said the Wolfsburg, Germany-based automaker will likely sell 8 million vehicles this year. If GM maintains its global growth rate in the fourth quarter, it will sell about 9.16 million cars. GM has had a few things to brag about, as well. The company has proved itself nimble enough to become the top seller in China with joint ventures selling luxury Buicks, bread-and- butter Chevrolets and subcompact cars with native Chinese partner Wuling. U.S. Gains The company has also rebounded in the U.S. In 2009, the company and its overseers at the U.S. Treasury Department debated shuttering all but two of its eight brands, including Buick and GMC, which would have left only Cadillac and Chevrolet in the U.S. After much deliberation, GM closed Hummer, Pontiac, and Saturn and sold Saab. Through October of this year, sales of the once-stodgy Buick brand are up 20 percent on the strength of its new Regal sedan. GMC sales are up 24 percent with sales of the Terrain SUV up 54 percent. GM’s total U.S. market share has risen to 19.8 percent through October from 19 percent a year earlier, according to Autodata. Some of the credit for GM’s recovery at home goes to the management team led by former Chairman and CEO Rick Wagoner, who was fired by the Treasury Department in 2009, said Jeremy Anwyl, CEO of Edmunds.com, a consumer-research website based in Santa Monica, California. Wagoner hired retired Vice Chairman Bob Lutz, who led a product renaissance. “Wagoner gets some credit for this,” Anwyl said in a phone interview. “He invested in China more than 10 years ago. A lot of the product that is selling in the U.S. goes back four to six years.” Under the old management team, GM developed hot sellers like the Lacrosse, Terrain, Chevrolet Equinox SUV, the Chevy Cruze compact and the Chevy Volt plug-in hybrid. Through October, the Cruze was America’s best-selling compact sedan. While the Volt sells in small numbers, it has given GM a technology story to tell. GM’s strength in emerging markets should keep it on top of the heap, said Jim Hall, principal of 2953 Analytics Inc., a consulting firm in Birmingham, Michigan. The Detroit automaker is well-positioned in China and in India. “GM is in a better position in China than Toyota. That could do it for them,” Hall said. “To keep the lead in the long term, GM will have to match VW’s growth here and push more sales in China.” India will be another big battleground, said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a research firm based in Oxford, England. The market is dominated by local players. GM ranks third with 3.4 percent of the market, just ahead of Toyota, with 2.8 percent, and VW with 2 percent, he said. The Indian car market will buy 3 million cars this year and may grow to 5.5 million by 2015, Schuster said. A big question for all three automakers is whether being No. 1 is a good idea, Keller said. “You’ll have a three-way battle and you can’t pick a clear winner,” Keller said, adding, “The only thing that matters is being No. 1 in profit.”
‘Not a Goal’
Lower EBIT
Toyota’s Challenges
More Competition
‘Some Credit’
India’s Importance
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#1. To: Brian S (#0)
Good for them. I hope the trend continues.
Who really cares????? This is only making the Union bosses stronger, the average person doesn't benefit from this.... Most if not all of the vehicles manufactured for outside of the USA global sales are made where????? In other countries!!!!! And the taxes that are paid on those vehicles go where???? To the coffers of other countries!!!!
"CHANGE" you can step in..... The Obama regime is buying cars from itself and selling them to their landlords in China, big whoop. I know one person guaranteed to never buy a Government Motors vehicle from Barry though. The shameless pilfering parasites ought to be giving them to the taxpayers they hosed.
No you know 2!!!
"CHANGE" you can step in..... GM said global sales have risen 9.2 percent this year and has earned fatter profits than it has in more than 20 years.
#2. To: Brian S (#0)
GM’s Global Resurgence to No. 1 Symbolizes New World for Automakers: Cars
My dogs have created more shovel ready jobs than the self appointed Messiah!!! Number of shallow, inadequate, hypocritical Leftards who have me on BOZO---3.......... That means I'm doing my job correctly !!!!!!!!!
#3. To: Brian SS (#0)
(Edited)
#4. To: Happy Quanzaa (#3)
I know one person guaranteed to never buy a Government Motors vehicle from Barry though.
My dogs have created more shovel ready jobs than the self appointed Messiah!!! Number of shallow, inadequate, hypocritical Leftards who have me on BOZO---3.......... That means I'm doing my job correctly !!!!!!!!!
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