At the beginning of the decade, General Motors (GM) had a 30% share of the US automobile market and Toyota (TM) had about 9%. Today, GM has less than a 20% share and Toyota about 19%. Now that GM has been once again caught flat-footed making millions of gas guzzlers no one wants, Toyota may pull ahead in June on the strength of its more fuel efficient cars. So GM is reevaluating its business, taking a “hard left”, and putting product development on hold (WSJ):
The intensified strategy review began about two to three months ago after Frederick “Fritz” Henderson was named chief operating officer, and sales of GM’s highest-profit trucks and sport-utility vehicles essentially collapsed, GM spokesman Steve Harris said….
The fate of a new generation of full-size pickup trucks and SUVs that were originally slated to be launched early next decade, hangs in the balance. GM has suspended developing those products as it tries to gauge the viability of those products.
GM spokesman Dee Allen said GM believes sales of full-size pickup trucks will rebound, but doubts sales of truck-based SUVs will approach the highs they hit earlier this decade. GM is giving serious thought to how it should approach the SUV segment, he said.
While GM is more than a step behind its Japanese peers, this “reevaluation” was easy to see coming. Let’s just hope their new strategy isn’t too depending on those truck sales to rebound. If America goes under a major paradigm shift in its driving habits, GM must be prepared to survive. Otherwise that $1 dividend investors are likely to lose will be the least of their problems.
More bad news (Bloomberg):
General Motors Corp., Ford Motor Co. and Chrysler LLC credit ratings may be lowered by Standard & Poor’s as higher gas prices inflict “financial damage” on the auto industry.
American Gas Use Finally Dropping as Fuel Costs Near 1981 Levels (XOM, GM, F)
General Motors (GM) CEO Wagoner: We’re Not The Only Morons Who Make SUVs (GM)
General Motors (GM): Hummer Is Now Embarrassing To Us, Too: We May Sell or Kill It (GM)