GM Scores October Sales Gains

Finally, some good news for General Motors.

The struggling auto giant is grabbing back some market share, a very early sign that GM may be able to slow its four-decade slide. says GM's U.S. market share is 22.4% so far this month, which is a bump above the 19.6% GM has posted so far in 2009. The company's market share also topped 20% in September, thanks to some new models and—at long last—a boost in advertising.

"The ad campaigns are starting to click," said Art Spinella, president of CNW Marketing Research in Bandon, Ore. "The 60-day money-back guarantee has spiked interest. It has moved GM's products up the shopping list."

If GM can keep it up, the company can buy Chief Executive Officer Frederick A. "Fritz" Henderson some breathing room. Chairman Ed Whitacre, who was placed atop GM by the U.S. Treasury Dept. in June, has said to employees and dealers in recent months that if GM's management couldn't bring growth to the company, the new board of directors would find someone who would. Henderson said in a September interview that Whitacre wants to see traction.

Doomed brands hold almost 3% marketThe chairman has also said internally that GM needs to get market share above 20% next year, say two sources with knowledge of the matter. That won't be easy.

GM may have pushed its share above 20% last month and in the first half of October, but six weeks hardly makes a trend. The company will need to sustain its recent gains even as it downsizes its brands and its vehicle lineup. GM has said it will shut down Saturn and Pontiac, has already sold Hummer, and has a deal to unload Saab. Those four brands combine for almost 3 percentage points of share.

As those brands go away, GM will need to retain their buyers by interesting them in its remaining brands—Buick, Cadillac, Chevrolet, and GMC trucks.

New GM cars such as the Chevrolet Camaro, Chevy Equinox, Cadillac SRX, and Buick Lacrosse have had some initial success. So have GM's ad campaigns. GM is also getting better pricing, says company Vice-Chairman Robert A. Lutz. He told reporters at a media event on Oct. 14 that GM's average net sale price is up $6,000 this year over last year, to $31,800. Sales incentives are also down $1,200 a vehicle vs. October of last year, to $2,357 per car, according to CNW Marketing.

GM ads are luring Web shoppersThe company launched a campaign with Whitacre talking about the 60-day money back guarantee on any GM car. Then GM moved to ads comparing the features of its models with those of competitors. The Equinox faces off in an ad against the Honda (HMC) CR-V and makes the case that it has better fuel economy. GM boasts that the Lacrosse is as good as a Lexus ES 350 but sells for thousands less.

Since launching the campaign, 15% more shoppers have looked at GM's brands on, according to the Web site., another site that tracks retail auto prices for consumers, said 7% more buyers looked at GM's brands this month, according to Jesse Toprak, True Car's vice-president of industry analysis.

Analysts say these are good signs for GM. But the company's struggle to overcome the stigma of bankruptcy and government ownership—the federal government own 60% of it—will take a long time to fix. "It's a right step," Toprak says. "But it's a fine tuning of the brands. They realize that the promotion they're doing will not necessarily get people to leave their Toyota (TM) or BMW (BMWG.DE)."

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