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General Motors Faces Challenges in Market Share Despite New Model Unveils

Strategic Insights

— 1 min read

General Motors' unveiling of new cars this week, designed to surpass rivals, may not be enough to boost market share this year, according to analysts from Credit Suisse Group, JPMorgan Chase, and Morgan Stanley. The company's lineup is deemed older and inferior to competitors, including Ford. GM lacks sufficient new models and will replace them at a slower rate in the near term, leading analysts to suggest that replacing vehicles at a faster rate tends to drive profitability.

Key Takeaways:

  • General Motors' product replacement rate trails the industry in 2011 and is expected to be in line with competitors in 2012 and 2013, according to Bank of America Merrill Lynch's "Car Wars" report.
  • The percentage of GM's sales from "new or heavily redesigned" vehicles fell from 40% in 2007 to less than 14% in each year through 2010, according to Credit Suisse estimates.
  • GM's U.S. market share may fall to 18.6% in 2011 from 19.1% last year, according to Jeff Shuster, director of forecasting for J.D. Power and Associates.
  • The automaker delayed some new model introductions during its bankruptcy in 2009 and will increase model launches in 2013 and beyond, said Stephen Girsky, a vice chair.
  • Sales of the Chevrolet Cruze rose 35% from November to 10,865 in December, following deliveries that began late last year.
  • General Motors plans to pull ahead specific vehicle introductions in its home market, with CEO Dan Akerson instructing top executives to do so, said Stephen Girsky.

Statistics:

  • 40%: The percentage of GM's sales from "new or heavily redesigned" vehicles in 2007, according to Credit Suisse estimates.
  • Less than 14%: The percentage of GM's sales from "new or heavily redesigned" vehicles in each year through 2010, according to Credit Suisse estimates.
  • 12%: The portion of GM's sales from "new or heavily redesigned" vehicles this year, before rising to 30% in 2012 and 26% in 2013, according to analyst Chris Ceraso.
  • 18.6%: GM's U.S. market share in 2011, potentially falling from 19.1% last year, according to Jeff Shuster.
  • 10,865: Sales of the Chevrolet Cruze in December, a 35% increase from November.

Sources:

  • Bank of America Merrill Lynch's "Car Wars" report (published last year)
  • Credit Suisse estimates
  • Chris Ceraso, analyst
  • Jeff Shuster, director of forecasting for J.D. Power and Associates
  • Stephen Girsky, vice chair
  • Mark Reuss, GM's president of North America
  • Paul Sancya, The Associated Press

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