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GM sticks to its plan

Tue., March 28, 2006

DETROIT — General Motors Corp. expects its U.S. market share to continue to fall in the first quarter of this year due to aggressive competition, but said it won’t reverse its strategy of lowering prices and relying less heavily on discounts, GM marketers said Monday.

“We’re certainly not pleased with current share levels and we’re not satisfied with it, but we have to run this play,” Paul Ballew, GM’s executive director of market and industry analysis, said during a teleconference with media.

Ballew said GM’s U.S. market share — which is critical to the company’s North American turnaround — will be about 24 percent in March, down from 27 percent the previous year. Ballew said GM’s first-quarter U.S. market share is expected to fall by 1 percentage point, or about 250,000 vehicles, to about 24 percent.

GM isn’t alone, according to Edmunds.com, an online vehicle research site, which predicts overall industry sales will fall by 3 percent in March. Automakers report March sales next week.

“The market is healthy,” said Jesse Toprak, executive director of industry analysis for Edmunds.com. “The year-over-year decline is mainly because of the exceptional sales volume we experienced last March.”

But the numbers are particularly important to GM, which lost $10.6 billion in 2005 and has been struggling with declining sales at the same time its labor and health care costs are rising. The world’s biggest automaker last week offered buyouts to 113,000 workers and is expected to make further cuts to its salaried ranks this week.

GM said Monday that its pricing strategy is paying off. The company announced in January it was lowering prices on 80 percent of its models and would rely less on costly incentives. Mark LaNeve, GM’s vice president of sales and marketing, said the company has seen a spike in online shoppers comparing prices with other brands.

LaNeve also expects less volatility in the marketplace this year since prices will be steady.


 

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