Buyers Seem to Be Ignoring GM Bankruptcy

Commentary

Will consumers buy from a bankrupt auto maker? There always are bargain hunters, but I was certain many would stay away.

With Pontiac and Saturn out of the picture, I figured General Motors would be down to 16% market share, losing perhaps another 3% as worried potential buyers talked themselves out of visiting a GM showroom.

That would have left GM with as little as 13% share. At least, that’s what I figured, and I have a lot of experience covering failing auto companies.

So far, I’m wrong. GM’s market share has been climbing since it left bankruptcy, hitting 20.2% in November. In 2009’s first quarter, its average share was 18.7%.

I expected the bankruptcy to stifle sales to the point that Toyota and even Ford would catch GM during at least one month in 2009. But it hasn’t happened. GM is likely to end the year with 2 million car and truck sales in the U.S., roughly 300,000 units ahead of Toyota and 400,000 units ahead of Ford.

I also figured Toyota or Ford would outsell GM in 2010. The gap between the three top sellers was cut in half in 2009, but I might have to back off the prediction. Toyota has its own troubles with safety and recall issues right now, and Ford isn’t moving up as fast as I foresaw.

This still could change: Perhaps the full effect of Pontiac and Saturn shutdowns has yet to materialize. The Chevy Cruze small car already is late coming to market. Bad things still could happen.

But GM vehicles have been getting good reviews and publicity lately, and a lot of solid new product is coming. The Chevy Equinox and GMC Terrain cross/utility vehicles, Buick LaCrosse sedan, Cadillac CTS sportwagon and SRX luxury CUV are all-new, and we’re seeing lots of coverage of upcoming cars such as the Cruze, Chevy Camaro convertible, Buick Regal, Cadillac CTS coupe, and Chevy Volt extended-range electric vehicle.

It’s a long and impressive list.

Even so, product questions remain. Will the Volt be a mind-blowing success for GM, as it hopes?

GM’s track record in small or radically different cars is not a good one. In the 1920s, GM produced an envelope-stretching, air-cooled Chevrolet, which failed.

In 1959, there was another air-cooled engine in the Corvair, which was less than a success.

After that, there were duds such as the Chevy Chevette, a poorly engineered small car, and disasters such as the Chevy Vega, which suffered from chronic overheating and other quality glitches.

And then there was the star-crossed EV-1 electric car.

With the Volt, 8,000-10,000 units are expected to be built in 2011, and after that 50,000-60,000 a year. The price, expected to be in the $40,000 range, might be a problem even with generous government tax incentives. We’ll see.

The main thing is the car has to perform as advertised, and keep GM in the new-technology game being played by auto makers around the world. If the Volt outsells Nissan’s Leaf electric car, that might be enough to declare victory.

Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.