General Motors’ market share last month hit an all-time low, according to Edmunds.com’s analysis of June sales.
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GM’s June market share slumped to 22.17%, the lowest level in recent history and dipping below the previous monthly low of 22.3% in October 2005.
In June, the industry sold 1,455,236 vehicles; GM sold 322,048 vehicles, down 24.2% from June last year. GM closed 2006 with 24.6% market share.
“GM may have miscalculated the need for incentives in June, particularly as Toyota and Honda boosted incentive spending to their record levels,” said Alex Rosten, Edmunds.com’s manager of pricing and market analysis.
Excluding a summer strike in 1998, the previous low-water mark of October 2005 came the month after GM instituted its employee pricing promotion. The campaign proved successful in terms of increasing sales but it wiped out inventory for October sale, leading to the low market share. It also was a money-losing venture for GM.
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By GlobalDataWhat, if anything, GM plans to do to increase market share this time is unclear, Edmunds said. It has been focused on profitability more than increasing sales volume and market share and has been on a strategy of scaling back incentive spending.
But Edmunds suggested GM may have scaled back too much – of the Big Six automakers selling vehicles in the US, only Honda and Toyota had higher incentives in June compared with June a year ago and Toyota and Honda also raised incentives in June from the month earlier.
In contrast, GM went in the opposite direction, cutting average incentives by nearly 10%, Edmunds said. In June, GM spent an average of $US2,830 per vehicle on incentives, still more than Honda and Toyota but the least amount of any of the Big Three. June 2007 was the only June in the past six years that GM’s incentive spending fell below the $3,000 mark.
In Edmunds’ analysis of the month of June for the past six years, GM hit an incentive spending high of $4,277 per vehicle in June 2004, which got GM a 26.2% market share. The highest market share for a June in the past six years was in June 2002, when GM had 30.2% market share with average incentive spending of $3,018 per vehicle.
Edmunds noted that forecasters had predicted GM sales and market share in June would be down from a year ago, but the reality was worse than the predictions – its sales fell 24.2%, not the single-digit drops many expected.
GM attributes this year’s decline to a cutback in low-margin sales to car-rental companies, but Edmunds said that was not the whole story as s sales of GM trucks were a significant weak spot in June, dropping 26.4%, in a pickup truck market that is in part down due to a slow housing sector and competition from the likes of Toyota with a incentivised new Tundra, Ford and Chrysler.
Edmunds said GM had enjoyed success with a line of new crossovers [just-auto has seen many favourable reviews in the US enthusiast press] but then mentioned a recent Wall Street Journal (WSJ) column that quoted Goldman Sachs auto analyst Robert Barry as saying: “I just don’t believe GM is going to sustain over the long term anywhere near its current market share.”
Barry reportedly predicted GM’s market share could slide into the “mid- to upper-teens” given the fierce competition in the US market where high fuel prices and that difficult truck market do not bode well for the automaker’s future.
“And a lot of competitors have better reputations, better balance sheets, better dealer networks,” Barry reportedly told the Wall Street Journal.
Just to rub it in, Automotive News on Monday said Detroit’s domestic brands would sink below 50% of the market in coming months – possible as early as this month after GM, Ford and Chrysler group clung to just 50.2% of the new-vehicle market, a historic low, last month. Last June, their combined share was 56.0%, AN noted.
