Corp. witnesses a 12% plunge in its September sales (adjusted for 24 selling days this year vs. 25 last year), but the auto maker calls the performance âoutstandingâ given the weak economy and tightening consumer-credit market.
GM delivered 282,878 vehicles in the month, compared with 335,260 year-ago, according to Wardâs data.
GM executives also take the opportunity in a conference call with journalists and Wall Street analysts to press lawmakers to pass a $700 billion bailout of the nationâs financial industry.
Mark LaNeve, vice president-sales, service and marketing at GM North America, says the industry began wrestling with tighter lending standards a few months ago, as the financial sector struggled under the weight of the subprime mortgage marketâs collapse. But banks grew particularly stingy in September, requiring elements such as more cash in the deal and refusing to bump some buyers up a notch in their credit ratings, he says.
âClearly it was a headwind for the industry and for ourselves,â LaNeve says of the credit crisis. âItâs not good. Itâs a limiting factor on our industry right now. The quicker we get this sorted out the better weâre all going to be.â
LaNeve also voices support for language in the bailout giving the government the opportunity to buy bad loans from automotive finance firms, in addition to the mortgage defaults it would assume from Wall Street.
âIf we can free up more capital for GMAC (LLC) and the other OEM (captive) financing companies that is going to support more business, so Iâm voting for that one,â he says.
Mike DiGiovanni, GMâs chief sales analyst, warns of a potential economic disaster should the bailout not pass through Congress soon. The proposal was voted down Monday, as a majority of lawmakers questioned the governmentâs role in the financial markets and the planâs long-term effectiveness. It appeared headed closer to passage Wednesday afternoon.
âWe clearly think we need it,â DiGiovanni says. âIf you ask the experts we have here at GM â we have some pretty smart economists â (and) we feel it is critical. If it doesnât happen, itâs going to set off a spiraling down in the economy, and not just for our business but for all businesses.â
But GM sales appeared to fare relatively well last month given the credit crisis, especially on the truck side of the ledger, as pump prices continued to stabilize. Oil stood at about $100 a barrel today after reaching more than $140 a barrel a few weeks ago, while gas prices eased to a national average of $3.62 per gallon from a record $4.11 in July, according to the American Automobile Assn.
GM delivered 69,172 Chevy Silverado and GMC Sierra fullsize pickups in September, although the trucks remain off by 22.5% and 14.9%, respectively, so far this year, Wardâs data shows.
âThatâs an astounding month and would have been good in â04 or â05,â LaNeve says.
LaNeve points to an âEmployee Discount for Everyoneâ incentive the auto maker ran in the month and a demographic that tends to bring good credit to the table, although GMâs truck sales trailed last yearâs performance by 16.0% and remain off 22.7% for the year.
âWe had real smart (incentive) play,â he says. âOur employee-discount play in essence is a net-price play, a fixed price, and dealers are able to shop that price in the open (credit) market or with GMAC. Weâve got good buyers in terms of their creditworthiness in pickups, and we were able to get some business done.
âConsidering what was going on, we had a timely, effective play in the marketplace,â he says.
GM concluded the employee-pricing event Sept. 30, saying it pushed incentive spending up during the month by about $100 per vehicle. Little to no leasing helped offset that cost. The auto maker launches in October a new campaign featuring 0.0% financing for between 36 and 72 months, depending on the model. It will last 45 days, or until GM starts its annual end-of-year âRed Tagâ event.
GM estimates it earned upwards of a 29.0% share of the market in September, with better-than-expected sales in its midsize car and cross/utility vehicle segments. Chevrolet Malibu deliveries, for instance, continued their blistering pace with a 75.2% uptick, while the Buick Enclaveâs 39.1% sales increase led gains by all three of its midsize CUVs. GMâs car sales fell 6.1% in the month.
A mix shift slightly toward trucks and a number of solid-performing entries in the passenger-car and CUV segments gives GM confidence heading into the fourth quarter, DiGiovanni says. However, he continues to sound a word of caution over the economy.
âThis stability and decline in oil prices obviously is helping parts of our business, (but) the balance in our portfolio is clearly helping us in this turbulent time,â he says.âOur performance has been outstanding vis-Ă -vis the industry, but that said we remain concerned about the economy going forward.â
GM concludes the month with an inventory of 716,910 vehicles, marking its leanest September on record and down 179,000 units from like-2007. Trucks comprise 319,000 units of its Sept. 30 inventory.