General Motors Company (NYSE: GM) today reported July sales in the U.S. of 201,237 vehicles, a 6% decline compared with a year ago in what is a slowly recovering U.S. auto market that grew by 9%. GM sales to retail customers were off 3%.
GM’s relatively poor performance was attributable to a large drop in sales to daily rental fleet customers, which were off – 41%. GM previously stated that it needs to wean itself from these low profit sales as it struggles to increase its margins. As a result, the so-called average transaction price at GM increased $700 compared to June, and $260 year-over-year.
Nonetheless, GM is facing an uphill battle in the U.S. where market share continues to decline in the face of strong new products from Japanese and other automakers. While GM has had some recent product successes, it is by no means clear that GM can increase its market share, or at least halt the decades long declines, particularly in the U.S.
GM’s U.S. market share is down -1.8% to 18.1% through June of 2012 compared to the first half of 2011. Worse, from a global competitiveness point of view, preliminary first-half sales numbers indicate that Toyota Motor Corporation has surpassed GM as the world’s largest automaker. Last Sunday, General Motors tersely said that Global Chief Marketing Officer Joel Ewanick resigned, effective immediately.
GM will release its Q2 earnings tomorrow where marketing and product launch costs, as well as disastrous results in the EU where unemployment is now 20%, will hurt returns. This puts the company’s brands in a tough spot since they are limited in spending marketing money – the traditional way sales executives moved the metal off of factory lots. GM incentives, estimated by Edmunds at $3,311 per vehicle continue to lead the industry, and for that matter all of the Detroit Three incentives remained high in July, with Ford Motor at $2,742 and Chrysler Group at $2,731 while the industry average is $2,236.
Three out of four of GM’s remaining U.S. brands were down in July compared to 2011 when the Japanese were essentially out of the market. Chevrolet was off -7%; GMC -9% and Buick -15%. The exception was Cadillac with strong sales that increased 21% thanks to the CTS (5,000), Escalade (2,000), SRX (5,000) and even the all-new XTS contributing 1,700 units.
If you’re keeping score, the Top Ten in July looks like this in round numbers: GM 201,000; Ford Motor 174,000; Toyota Motor Sales 166,000; Chrysler Group 126,000; American Honda 117,000; Nissan North America 98,000; Hyundai 62,000; Volkswagen Group 49,000; Kia 48,000; BMW Group 27,000.
GM new products sold reasonably well in July. Buick Verano sales were 4,235 units and have increased each month since the car launched in December 2011. However, Verano has killed the Opel-based Regal – off 49% at 1,800 units – which is smaller and more expensive, a tough showroom challenge. Chevrolet Sonic sales were 6,278 units and GM says it has been the retail sales leader in its segment since April 2012. Chevrolet Spark deliveries were 1,460 in its first month on sale.
How this works out for the back end of the year remains to be seen. Two all-new vehicles – the 2013 Chevrolet Malibu and Cadillac ATS – are now in production. Vehicles launching later this year include the Buick Verano Turbo, Buick Enclave, Chevrolet Malibu Turbo, Chevrolet Traverse and GMC Acadia.
Moreover, General Motors faces a tricky launch of its substantially revised C/K pickup truck line late in Q4. Chevrolet Silverado was off 13% in July, but still strong at 29,000 units ( Ford F-Series sold 49,000), while the GMC Sierra dropped 12% to 11,000 units.
“Signs of a housing recovery and good news on consumer confidence and household income should help keep the light vehicle selling rate in the 14-million range and drive seasonally higher truck sales as we move toward fall,” said Kurt McNeil, vice president, U.S. Sales Operations.
As always sales execs remain optimistic in the face of disappointing returns.