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Behind The Wheel

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Apr.27

7:15 AM ET

Monday, 27 Apr 2009

GM To Be Number One No More?

Posted By:Phil LeBeau

Topics:Marketing | Alternative Energy | Automobile Industry

Sectors:Automobiles and Parts

Companies:Toyota Motor Corporation | General Motors Corp

GM Headquarters
We've known for some time this day was coming. As much as GM has denied it will ever fall behind Toyota in the U.S., the latest cuts by this company paint a far different picture. Now that GM is putting Pontiac out to pasture, planning to cut another 6 production plants in the U.S., and squeeze out hundreds of dealers, I am hard pressed to see how GM remains #1 in U.S. sales.

Oh I know some of you are reading this and saying, "Who cares if GM is the top dog? The company needs to make a profit before it can worry about being the market leader." I couldn't agree more, but the stunning decline in GM sales and the direction they are headed is enough to make even GM's harshest critics take notice.

So far this year, GM has outsold Toyota [TM Loading... () ] by 50,030 vehicles, according to the latest numbers from Autodata. But look at what happens when you strip out the four brands GM is selling, spinning off, or closing (Pontiac, Saturn, Saab, HUMMER).

Minus those brands GM falls to #2 in the U.S., 16,738 vehicles behind Toyota and 19,741 ahead of third place Ford.

Let's be clear, GM [GM Loading... () ] won't turn over the top spot immediately. It will take months to wind down Pontiac, closing scores of dealerships will take even longer, and fleet sales will likely pick up as the economy improves which will help GM. Also, when the economy and housing markets start to come back so will demand for the Chevy Silverado and GMC Sierra pick-ups.

Still, the writing is on the wall. GM will soon find itself in a position where Chevy, Cadillac, Buick and GMC will need to beat Toyota, Lexus and Scion. In a street fight between those two, who do you put your money on? When I ponder that question, I'm reminded of what one industry veteran told me years ago: when sales have been sliding, it's hard to turn it around and pick up sizable share.

That's what GM will have to do now that it has just four brands. And let's be honest, it really only has three brands bringing anything to the table in the U.S. Buick has limped along for years. Not even hiring Tiger Woods as a pitchman could make Buick hip enough to truly shake up the market. That said, Chevy, Caddy and GMC are three mighty good brands with models (Malibu, CTS, Yukon) to beat Toyota, Ford, and other brands.

The key will be finally coming up with a marketing plan that goes beyond hefty incentives, an old GM ploy that has worn thin and fails to win over customers who have been driving the competition. Time to see if GM can beat the odds and show that less is more.

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