One of the pillars on which the U.S. government rested its confidence in GM was the belief that the company’s products were much better than that of their reputation. This theory had better prove itself true soon if the government expects to recoup its investment in the automaker, which is amidst preparation for an IPO later this year. The November IPO is now being foreshadowed by a softer-than-expected market for new vehicles in this country, despite a 6.3 % sales increase for the company through September. Even with the sales increase however, market share is down to 19.1%, from 19.4% a year previous.
That is in large part due to the fact that GM was selling four more brands at thus time last year than it is now. Chevrolet’s market share is up over one percentage point when compared to last year.
Industry forecasters had expected sales of around 12 million units. It seems now as if the industry will only move around 11.5 million, which will undoubtedly spur a slower production, which means instantly lowered revenue and profit.
GM finds itself between a rock and a hard place, as a decrease in production will lead to decreased revenue, but access inventory will be repugnant to the company’s new philosophy of disciplined production, hence avoiding firesale promotions to clear inventory.
– By: Stephen Calogera