GM’s executives are well-known for their optimism, a tradition that has been maintained throughout nearly 40 years of sales and market share decline. But in an interview with Reuters, GM CEO Fritz Henderson curbed his enthusiasm, predicting US sales in 2010 will be “between 10m and 10.5m units” this year, and reaching 13m to 13.5m units in 2011. That prediction is considerably less than Ford CEO Alan Mulally’s recent assessment that 2009 sales will hit 11m, and climb to 14.5m by 2011. Henderson blames a weak projection for September sales for his seasonally adjusted annual sales rate (SAAR) realism, telling Reuters the September SAAR would not top 9m units. But GM’s relative pessimism doesn’t mean GM couldn’t be in for a nasty surprise once annual financial information is tabulated.
Break even … would be a 10 million-unit market and an 18 percent market share. We’re going to achieve that goal. We don’t need the market to be 14 million or 15 million (units) to make money
Henderson repeats his opinion that new GM has slimmed down enough to make money at even the low end of industry sales predictions. However Henderson’s assumption requires GM to maintain its market share in the US, a goal that The General will be hard-pressed to achieve. GM’s deep dealer cuts may have helped slim the firm down, but they also present a real challenge to GM’s efforts to hold onto market share.
If GM is able to get 15 to 20 percent of the U.S. market, it will be nothing short of a miracle performed by the remaining dealers… It would be better to calculate what would be a reasonable share of the market for the new GM and then set sales targets. That would make it easier to forecast sales and measure results.
That’s the verdict from the usually Detroit-boosting Keith Crain over at Automotive News [sub]. And if Crain can’t get excited about GM’s future, good luck finding someone who can. Meanwhile, time isn’t exactly on GM’s side. Recent testimony before the Senate Banking Committee [via MarketWatch] reveals that GM’s IPO is still planned for next summer, meaning GM has less than a year to impress investors with its financial results. And believe me when I say GM’s stock offering will not be a simple referendum on US sales rates. If GM hasn’t proven that it can hang on to its market share and make money by the end of Q1 2010, expect its IPO to be delayed at best.
*YAWN*
The only thing that strikes me as odd… aren’t the projections eerily similar to what the much maligned Chrysler/Cerberus management postulated, oh… about a year ago?
Could it be that GM has finally learned that it is better to underpromise and overdeliver?
If they are making plans to be profitable based upon these lower expectations, then perhaps they are on the right track.
Ted, I seem to remember a conversation last spring about SAARs, and I guessed 10.4 for the year. Fritz and I see eye to eye on something, anyway.
Maybe it is that GM wants to be wrong ALL the time, both when it overpromised, and today when it may have underestimated the sales for 09..
18% of 10 m / yr = 1.8 m = 150k/month
In the 3 month period of Apr-June 09 (thats before C4C and includes GM bankruptcy), the four core brands sold at a rate of 154k/month (not including medium duty sales)
Big Al is a moron….there is no way that 2009 sales will be 11 million. Sept-Dec will be terrible for automakers and the dealers will be ghost towns.
As P71 noted, the C4C spurt is over. Those who were able to buy new, have.
Didn’t we have this discussion about a year ago?
(and didn’t more than a few of us come up with numbers in the 8-9 MM range?)