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GM Seen Holding U.S. Share After Slipping to 88-Year Low
General Motors Co. (GM) likely will maintain its position in the U.S. after its market share plunged to the lowest since Alfred P. Sloan’s first full year running the company.
GM may end this year with 17.9 percent U.S. market share, in line with where it finished 2012, according to a Bloomberg survey of five analysts. The Detroit-based carmaker’s share ended last year at the lowest point since 1924.
From the days when Sloan proposed offering “a car for every purse and purpose,” GM rose to 51 percent of the market in 1962 and held 31 percent as recently as 1997. GM lost 1.7 points last year, the most in the industry. Analysts project no moves that large this year.
“GM recognizes like all the major manufacturers do that we’re in a market where no one automaker is going to sit with 25 or 30 percent market share,” said Alec Gutierrez, an analyst for researcher Kelley Blue Book in Irvine, California. “A consumer can walk into a showroom at any of these major manufacturers and pick up something that’s generally going to be comparable to the best in the industry.”
Stabilization in GM’s market share, which has declined for nine of the past 10 years, would be positive news for investors after the stock last week reached its highest level in more than 17 months. Rising share prices would help the U.S. Treasury, which pledged in December to sell its 500 million shares in the following 15 months.
Toyota (7203) and Honda last year led U.S. vehicle sales to their highest annual total in half a decade as the automakers restored production that was disrupted a year earlier by Japan’s tsunami. Deliveries of cars and light trucks rose 13 percent, the biggest increase since 1984, to 14.5 million.
U.S. auto sales may climb to 15.1 million this year, the average of 18 estimates in a Bloomberg survey of analysts. The industry is benefiting from consumers replacing cars and trucks that are, on average, the oldest ever on U.S. roads.
“We see a more stable year in terms of the macro picture and the competitive picture,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “We’ve got an economy that should cooperate,” as well as available credit and pent-up consumer demand.
In 2012, GM still led with the biggest market share (17.9 percent), followed by Ford Motor Co. (F) (15.5), Toyota (14.4), Chrysler Group LLC (11.4) and Honda (9.8). Korean affiliates Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) combined (8.7) sold more than Nissan Motor Co. (7.9) and Volkswagen AG (VOW) (4), including its premium Audi brand.
Growth this year probably will be led by Volkswagen, Honda and Nissan, according to the five analysts surveyed about market share. The analysts’ average estimates are for little change to market share for GM, Ford, Toyota and Chrysler.
GM plans to introduce a redesigned Chevrolet Silverado as well as 12 other new models for its Chevrolet brand this year. The Detroit-based automaker’s Cadillac luxury brand debuted new ATS and XTS sedans in 2012.
“The XTS and ATS that came out last year should be getting into the swing of things, but the biggest driver will be the trucks,” said Ed Kim, an analyst at researcher AutoPacific Inc. in Tustin, California. “A continuing recovery of the economy, plus the fact that they’re going to have the all-new models, should bode well for those trucks.”
After gaining half a point in 2011, when Toyota and Honda were limited by natural disasters that halted production, GM’s U.S. market share slipped from 19.6 percent in 2011, according to researcher Autodata Corp. Ford’s market share declined 1.3 percentage points last year from 16.8 percent a year earlier, according to Woodcliff Lake, New Jersey-based Autodata.
Ford earned a record $6.47 billion through 2012’s first nine months in North America, where it also had an operating profit margin of 11.2 percent. The Dearborn, Michigan-based automaker boosted pricing as it introduced revamped models such as the Ford Fusion and Lincoln MKZ sedans.
“Ford has come out with great cars that have gotten a lot of attention, but they’re priced relatively high,” said Jessica Caldwell, an industry analyst for researcher Edmunds.com in Santa Monica, California. “It’s going to be hard for them to maintain share at current levels of pricing.” Caldwell didn’t provide estimates for 2013 market share.
GM declined 1 percent to $29.37 at the close in New York time while Ford slid 0.6 percent to $13.35.
Of the six largest automakers in the U.S., Chrysler was the only company to surprise industry analysts last year, posting a 0.7 percentage point gain in market share. Analysts a year ago projected on average that the Auburn Hills, Michigan-based automaker’s share would slip 0.2 percentage point.
“Chrysler has the product momentum and also the product image momentum,” said Jesse Toprak, an analyst for auto researcher TrueCar.com. “If you talk to a couple of the biggest dealership groups, they’re thinking that a couple of the biggest growth opportunities are the Chrysler brands and the VW brand.”
AutoNation Inc. (AN), the largest U.S. retailer of new cars and trucks, said last month that it would acquire three Volkswagen stores and one Chrysler store in Texas. Asbury Automotive Group Inc. (ABG) also announced a Volkswagen store acquisition in December.
Volkswagen, setting out to become the world’s biggest automaker by 2018, probably will boost its U.S. market share by 0.3 percentage point to 4.3 percent, the average of the five analysts’ estimates. The Wolfsburg, Germany-based automaker has said it’s planning two new sport-utility vehicles aimed at appealing to U.S. drivers.
“VW brands are always major forces pretty much anywhere they sell cars around the globe, and the fact that they are not a major force in the U.S. market is a complete anomaly,” said Toprak, who is based in Santa Monica, California. “They see this as a big growth opportunity, and they have the resources, people and know-how behind them to substantiate their claims.”
Volkswagen and GM chased Toyota for leadership in global auto sales through the first nine months of 2012, the most recent data available. The Toyota City, Japan-based automaker led through three quarters with 7.4 million deliveries, followed by GM at 6.95 million and Volkswagen at 6.9 million.
Toyota’s U.S. market share in 2013 may remain at 14.4 million, according to analysts surveyed by Bloomberg. Toyota added 1.5 percentage points of share last year, followed by Tokyo-based Honda’s gain of 0.8 percentage point.
Honda and Yokohama, Japan-based Nissan may each add about 0.2 percentage point of share in 2013, according to analysts’ average estimates. Those gains would push Honda’s market share back to 10 percent and boost Nissan to more than 8 percent.
“Honda’s on a really good path with good cars and good value,” Edmunds’s Caldwell said in a telephone interview. “Good value -- really nicely equipped with a decent price -- seems to be the magic formula. No one is ever going to say to you ‘Why’d you buy a Honda Accord?’”
Nissan Chief Executive Officer Carlos Ghosn wants to pass Honda in the U.S. market. Nissan held a slim lead of almost 2,200 sales through March before finishing the year with a deficit to Honda of 281,129 vehicles, according to Autodata.
“There’s going to be a lot of pressure from Japan on Nissan to at least gain some market share in the U.S. market,” TrueCar’s Toprak said. “Although they already lead the Asian automakers in terms of incentives, they might even go higher.”
Hyundai and affiliate Kia, South Korea’s two largest automakers, also may add 0.2 percentage point of U.S. market share this year, according to analysts’ estimates. The Seoul- based automakers combined to lose that amount of share last year, the first time the two failed to gain ground in the U.S. since 1998, because of capacity constraints.
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