Corp. suffered a 41.3% drop in November sales, further demonstrating the auto makerâs perilous situation as it pleas for a federal loan to survive the current economic downturn.
âAn instant replay of October, with the exception weâre a little bit better and the industry is a little bit worse,â Mark LaNeve, vice president-sales, service and marketing at GM North America, says of Novemberâs results.
GM delivered 153,453 vehicles in the month, compared with 261,396 year-ago, according to Wardâs data, for an estimated 21% of the U.S. market. Through October, the auto makerâs deliveries were down 21.9%, compared with like-2007.
GM sales last month plunged an industry-worst 47% to 168,000 units. Octoberâs seasonally adjusted sales rate of 10.5 million vehicles, plus Novemberâs 10.9 million, underscores the industryâs appeal for a $25 billion industry bailout.
Nevertheless, lawmakers last week sent GM,Motor Co. and LLC executives back to Detroit to draft a viability plan before a loan package could be considered.
GM delivers its plan today after the markets close, with Novemberâs repeat-performance arguably adding an exclamation point to the plan.
âItâs a terrifically difficult industry weâre suffering through right now,â LaNeve says in his monthly sales call with journalists and Wall Street analysts Tuesday. âIâve been in this (business) 28 years, (and) Iâve never seen anything remotely close to this for the industry. Itâs breathtaking to look at the numbers up and down the line for us and our competitors.â
In June 2005, shortly after LaNeve took over sales and marketing at GM, the auto maker conducted an inventory-clearing employee-pricing program that sold 475,000 retail units. In a bleak comparison, he says GM delivered that many retail units in the 4-month, August-November timeframe this year.
âAnd Iâm gonna tell you folks, weâve got much better product right now in every single category than we did in June 2005,â LaNeve says. âThatâs how severe the economic conditions are.â
Coinciding with the recovery plan GM is presenting to Congress today that calls for deep cost-cutting and a strategic review of the Saab and Saturn brands, LaNeve says the auto maker also intends to continue its present marketing plan; invest further in advanced-propulsion technology, such as the Chevrolet Volt extended-range electrical vehicle due in 2010 and strive to keep its dealers profitable.
âWeâre going to continue massive cost-cutting and continue leaning out the corporation to a much more flexible, fast-moving company of the future,â he says. âIn the meantime, we need to sell (vehicles) and maximize our cash.â
To accomplish this, LaNeve says GM will sweeten its current annual âRed Tagâ sale with âunbelievable offers.â It also will launch a new ad campaign for the program highlighting quality, fuel economy, value and performance advantages that have been masked by rumors of GMâs failing viability.
LaNeve says his group is not planning an alternative marketing strategy should GM be turned down for the federal loans and face Chapter 11 reorganization.
Marketing research groups estimate GM lost 25% to 30% of potential sales in November due to headlines speculating on bankruptcy. Earlier this month, CNW Research said an analysis of new-car buyers showed 80% would avoid purchasing a vehicle from a bankrupt auto maker.
LaNeve says determining sales losses in November due to negative news about GM is âextremely difficult to quantify,â but adds thereâs ânot a doubt in my mind it is affecting our business. With the products we have in the market right now, we would hope to be gaining share.â
LaNeve suggests GMâs Novemberâs sales losses due to negative news could be higher than 30%.
âHaving lived out there, itâs very easy for competitive dealerships to sell against us when weâre getting cross-shopped,â he says: âYou donât want to buy that GM product or thatproduct, because your warranty wonât be any good.â Thatâs going on. The sooner we get this (bailout) behind us, the better for our company and our industry.â
Mike DiGiovanni, GMâs chief sales analyst, says recent efforts by the U.S. Treasury and Federal Reserve modestly have thawed the frozen credit market, while sharply declining pump prices have put about $200 a month back in consumersâ households. But while the economy sits in a textbook recession, the auto industry currently suffers through a depression-like downturn.
âOil pricing declining does give (consumers) an income boost,â DiGiovanni says. â(But) we definitely need the credit markets to thaw further. You have to have liquidity to run a business.
âI donât care if you own a grocery store, a drug store or a lemonade stand. You borrow money to get the goods you need to sell and you pay it back after you make a profit. Thatâs the U.S. economy, and when you canât borrow it stymies that.â
GM also indicates further deterioration in its business with GMAC LLC, the auto makerâs captive financing arm majority-owned byparent Cerberus Capital Management LP. GM reports GMAC financed only 1% to 2% of the auto makerâs sales in November, after backing less than 10% in the preceding two months.
GMAC said in October it would stop financing consumers without the very best credit scores, and the decision has been costing GM sales, as its dealers seek alternative financing.