GM "Cautiously Optimistic" About Sales Recovery

General Motors put on a bright face Wednesday, introducing new Vice President of U.S. Sales Susan Docherty (former Pontiac-Buick-GMC chief) in a conference call. With the auto industry still deep in recession and GM 100 days out of bankruptcy, she was careful not to artificially inflate expectations.

“I’m not here to declare victory, but to talk about progress,” she said. “We have a long road ahead.” Docherty talked about “the new GM,” and asked rhetorically, “Are we going to slip back to the old ways? Well, maybe sometimes. Our priority now is getting our sales mojo back, to grow strong brands that can win hearts and minds and build a right-sized competitive dealer network.”

One blow to GM’s mojo was nagging reliability problems. The 2009 Consumer Reports reliability survey showed a few of what CU called “bright spots,” notably better-than-average reliability of the Chevy Malibu. But of 48 models, only 20 had average reliability scores. The Chevy Silverado and GMC Sierra 1500 pickup did well enough this year to earn recommendations. Still, CU did say the company has some “strong contenders” in the pipeline that are too new to evaluate.

GM is concentrating on four core brands—Chevrolet, Buick, Cadillac and GMC—and jettisoning Pontiac, Saab, Hummer and Saturn. Docherty’s good news is that the public is also focusing on the core, with 95 percent of sales there (as opposed to 85 percent a year ago). But you’d expect sales dropoff from lame duck brands.

Also good news for GM is a minor increase in market share to 21 percent in the U.S., and in October possibly its first month-to-month sales increase in 21 months. (Actual numbers will be available next week.) “Those are good numbers for us,” said Mike DiGiovanni, GM’s global industry and market analysis chief. He said the company is forecasting an annual sales market of 10.5 million cars (not including heavy trucks). 

“Our industry is in recovery,” DiGiovanni said. “We’re cautiously optimistic, but 10.5 million is still pretty bad—we haven’t seen numbers this low since the 1980s. It’s still better than where we’ve been.” So far in 2009, auto sales are down 27 percent compared to 2008 year to date.

DiGiovanni put GM’s mixed performance in context. “Credit is tight, with banks burned by bad auto loans demanding higher down payments,” he said. “It’s the worst recession in 70 years. Consumer wealth has been damaged, but we’re clearly seeing a return to more normalization. The stimulus package had a lot to do with the recovery we’re experiencing, and that spending is now wearing off. We can’t have a complete recovery until the economy can function without the stimulus and employment returns to normal levels.”