GM, Chrysler bounce back from the brink

DETROIT -- General Motors' comeback from near-collapse has been faster and stronger than most experts believed it could be.

But amid big profits and the success of many new vehicles, its U.S. market share is well below the levels that company executives projected five years ago in the uncertain period before bankruptcy.

Chrysler Group, on the other hand, is ahead of its market share projections issued at the same time.

GM, in its February 2009 viability plan submitted to the Obama administration, predicted its U.S. market share would remain close to 20 percent through at least 2014, slipping no lower than 19.7 percent in that stretch.

But GM's share fell to 17.9 percent in 2012 and 2013. It had just 17 percent of the market in January.

President Obama's autos task force rejected the plan, submitted as a requirement to obtain more federal rescue loans, specifically citing the market share projections and other numbers in it as too optimistic. Steven Rattner, head of the task force, later called many of GM's figures "ridiculous."

"The 'viability plan' delivered by GM in February had proven management incapable of dispassionately and analytically creating an achievable business plan," Rattner wrote in his 2010 book, Overhaul.

Updated forecasts submitted by GM about a month before it filed for bankruptcy protection showed its share stabilizing between 18.4 percent and 18.9 percent by 2014.

Chrysler also submitted its viability plan in February, and the task force rejected many of its projections as overly confident.

But after Chrysler partnered with Fiat, as the task force directed it to do, Chrysler surpassed its 2009 sales projections.

The market share of Chrysler's domestic brands, excluding Fiat, rose to 11.3 percent last year and 12.3 percent in January.

Chrysler had forecast its share remaining steady at 10.7 percent through 2016.

Chrysler had expected U.S. industry light-vehicle sales to total just 12.1 million last year, when 15.6 million vehicles were sold, meaning its 2013 U.S. sales volume topped the forecast by 462,000 units, or roughly 36 percent.

GM has exceeded its forecasts for profits, employment levels and other metrics, having emerged from bankruptcy protection with a much leaner balance sheet. It also is roughly on target in efforts to reduce the number of its dealerships.

But it has fallen short of its market share forecasts despite never experiencing the sudden drop-off in business that executives insisted would happen if it went bankrupt.

GM's market share has declined faster since 2008 -- 0.84 points per year -- than in the preceding 46 years, when it lost an average of 0.62 points per year.

The February 2009 viability plan concluded that GM would achieve "market share stability" by 2014. Although its share in 2013 was unchanged from 2012, it remains to be seen whether the declines have stopped.

"They've succeeded in changing the focus of the company from blindly going after market share to concentrating on why they're in business, which is profitability," said Jesse Toprak, chief analyst for Cars.com. "But there's going to be a point where GM's profits start shrinking if they don't stop this shrinkage of the market share as well."



ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences