Friday, January 7, 2022

Another Negative Milesstone for GM

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     Having started my career in the auto industry, my fascination for that industry has never waned.  Admittedly, I have written about Ford more than GM or Toyota mostly because it was my first corporate job and my grandfather had worked there.  Our church, St. Sarkis, was in Dearborn built on land that once belonged to Ford and my undergraduate school was on land that was once part of Henry Ford’s Fairlane Estate.  Ford loomed large in the life of Detroit, Dearborn, my own formative years, and my career.  Even when I left Ford, I worked at automotive suppliers before moving to New York and the consumer packaged goods industry in 1990. 

Here are a selection of my pieces on the auto industry.

Just this week, we learned that Toyota sold more cars that GM in the US for the very first time.  It was a front-page story in the Wall Street Journal.  I imagine it was huge news in Detroit. 

I thought I would be more shocked by this news but really did not impact me that much.  It was more of a whimper than a bang. The General Motors share of the market has been eroding since the Japanese invasion and fuel crisis of the 1970s. 

General Motor became the largest auto manufacturer in the world in 1931.  They held that position for 77 years until 2008 when Toyota took that mantle from them.  GM still led in the US until 2021, when Toyota outsold them here by about 100,000 cars.

At one point, I thought General Motors held close to 80% of the US market share.  I am not sure where I got that figure.  I believed it was from the internet which now insists that the peak share for GM was 50% in 1962.  Given they are now about 17-18%, it is still a large loss of market share and now leadership in their home country.  Globally, GM is third behind Toyota and Volkswagen.  Ford is sixth behind Hyundai Kia and Honda.

GM was founded in 1908 in Flint, MI by William C. Durant (1861-1947).  It was a holding company of automobile manufacturers.  Durant even borrowed the General part of the name and the holding company business model from General Electric.  The company began with Buick and acquired of Cadillac and other brands which have faded away over time.  He had backing from Charles Stewart Mott in the early days of the company.  They were going to by Ford in 1909 but for an economic panic in the country at the time and his bankers thinking he was over leveraged.  Durant was removed from office board who were heavily influenced by the bankers.

Durant went on to found Chevrolet in 1915 and grew it to the point where Durant with the backing of Samuel McLaughlin and Pierre S. DuPont took over GM in 1918.  A few years later DuPont severed ties with Durant and brought in Alfred P. Sloan (1875-1966).  Sloan is credited with bringing modern management to GM making them able to be fiscally sound and economically better managed than Ford whom the surpassed in US market share in 1931.   He is credited with bring in the annual model changed, the brand architecture (from entry/value to luxury), a reliance on industrial engineering, styling, and even planned obsolescence.  He led the company from 1923 – 1946.

In my years in the automotive industry and living in Detroit, I found the culture of GM to be arrogant.  The engineers and managers I would interface with were absurdly self-assured as their market share slowly eroded.  Along with Ford, GM struggled in the 70s and 80s to adapt to and fight the superior quality and reliability of the Japanese, primarily Toyota and Honda, vehicles.  By the 2000s, they were making competitive cars, but their reputation and image lagged and continued to erode. I last bought an American car in 1999.  It was a GM.  I do not see me buying another any time soon.

There was a true culmination point on June 8, 2009 when GM filed for Chapter 11 bankruptcy in the depths of the Great Recession.  Today GM is run by Mary Barra, the first woman ever to run an automotive company.  Under her leadership, which includes experience in running manufacturing engineering worldwide and the global supply chain, she has assembled a diverse team including a female CFO to guide General Motors to the future of whatever the mix of electric vs. internal combustion and sedans vs SUVs/pickup trucks will be.  A year ago on January 29, 2021, GM announced their intention to only offer electric powered vehicles by 2035.

Will GM regain the market share lead in the US?  It is certainly possible as the gap this year was only 100,000 vehicles.  It could happen this year.  But GMs trend does not me want to bet on them.  Globally, I do not see GM regaining that market share lead any time soon.

I tried to find a comment from Mary Barra on this news but could not.  From Reuters:

GM spokesman Jim Cain said the Detroit automaker had a very strong sales year in the United States in full-size SUVs and pickup trucks as it has focused on profitability, and as the supply of semiconductors improves, so will sales.

"I wouldn't rush out if I were (Toyota), and get a 'We're No. 1' tattoo," he said.

Atta boy Jim!  It is good to see that old GM arrogance alive and well.

 

* Global market share numbers from factorywarrantylist.com *

 

 


 

 

 

 



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