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GM's Batey Puts Faith in Numbers

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#1 ·


GM's Batey puts faith in numbers


Profit margins take the edge off share losses

May 23, 2016 @ 12:01 am

Mike Colias

DETROIT -- Chat with General Motors North America President Alan Batey, and you'd hardly suspect that GM gave back 0.7 percentage point of U.S. market share this year through April, the worst performance of any major automaker.

That's because the ebullient Briton sees plenty of other numbers he likes. GM's retail sales have risen for 12 straight months, the result of organic demand for the redesigned 2016 Chevrolet Malibu and other new entries, Batey says. Inventory has been running in the 70-day range, GM's trimmest levels in years. Average transaction prices on its full-size pickups -- which account for more than half GM's profits -- are about $5,000 higher than they were just a few years ago, GM says.

"There will be months when you'll look at the initial number and say, "Wow, GM had a really tough month,'" Batey said in an interview this month. "You just have to peel it back and see what was behind it, and I think the truth comes through that it was very, very strong."

GM's crash diet from sales to daily rental fleets and the subsequent drop in market share present a huge test of wills for Batey and other GM leaders. Ford Motor Co. crept to within 1.3 percentage points of GM's market share through April, to 15.6 percent vs. GM's 16.9 percent. (Ford hasn't finished a year that close since 1930, the last time it topped GM, according to the Automotive News Data Center.)

(continued at link)
 
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#2 ·
In a mature market like North America, this is the right strategy. No point in chasing market share at the expense of margins. Given the lack of big growth, what GM is doing makes sense. Grow margins across the product line -- in other words, make more of each sale. Where share matters is in higher growth markets like China, where if you don't grab market share, somebody else will. It appears GM is executing the right strategy in each market.

Better residual values from this approach will also help leasing down the road -- a huge issue in the luxury realm.
 
#6 ·
While I agree, we are nearing the top of US growth, it has just grown 70% since the bottom.

You want GM to "chase" market share in China, where they currently make almost no money? Seems like that would be the place they should be "greedy".

Regardless of the mix; GM has far more brands/models than their competitors; at what point does market share become a concern?
 
#3 ·
Good job GM! Keep it up! Nice to see GM no longer being a veritable charity organization for the sole purpose of paying salaries to union and executives of GM and putting some thought into the shareholders. GM just needs to sustain these margins and hopefully, some day, this will be reflected in their stock price.
 
#4 · (Edited)
At the very least, the revised Bankster plan will likely have an intended parity perception between GM and Ford.....and Toyota in NAFTA.

At the very least...... in terms of Raw Sales Unit Volume in the US Market.

As disgusting as this is ( in so many ways )...... that's still a big change from the original.......... with GM behind or well behind Ford and way behind Toyota - and much the same in the more immediate follow ons.

GM's Management say what you will........ deserves some sort of credit with this .... ....because along with some other developments....... including outside of Ford and Toyota... they have in fact forced their position forward.

Good for them.


The 'Rules' / the 'Preferred Guidance' likely assumes / assumed so much and also....... so much other all wrong as is the norm with Bankster 'work' so there are likely areas such as Retail - Retail / Fleet Ratios where GM can run more freely and still be in 'compliance'.
 
#14 · (Edited)
GM would have saved $25 billions if they had shut down Opel Group a decade ago, and replaced it with Chevy in Europe, GM would have had a lot more money to reinvest in better products at GM, also they would not have been a drag on pay of GM's workforce that deliver the profits mainly from the trucks in North America at Chevrolet/GMC.

Opel group were using cheap n' cheerful South Korean Karls/Viva's, so Opel are no slightly more snobby upmarket a Chevy, a Le Mans winning Corvette is more upmarket than anything than Opel produce!

Opel Group had a massive pension scheme liability in Europe, was the main reason GM could not have offloaded a huge money pit onto to some stupid naive buyer, even a asset stripper would not touch Opel at the time.

If Opel group had merged and became just one brand Chevrolet in Europe GM could have used this as a ideal time to best of both brands and get rid of the worst models in both brand cars, kept the best Opel Europe offers Adam/Corsa/Astra/Mokka/Vivaro and merged them with the best of Chevrolet i.e Cruze/Corvette/Camaro/Malibu/Commodore from Holden as a global flagship car maybe rebranded as the Impala with more fuel efficient engine options other than just a v8, etc that would have limited the cutback huge problem of Opel pension scheme liability GM had in Europe as GM would have just kept on the best of Opel in production without having to bailout the whole Opel pension fund as a lot of EU Opel plants would be kept open rather than all closed, get rid of of the worst car models in the Chevy/Opel brands fire breathing Zafira has just cost GM another $50 millions in Europe with another type of onboard fire is very tainted model, South Korean Spark in Europe was one of the worse ever GM cars ever sold in Europe thats another, that was loathed by all that bought the, build quality was abysmal that could be axed. GM sould decide what other duplicated model could be axed or kept on at Opel/Chevy, then rebrand them as Chevy globally. There would have be a massive savings on loads design centres/duplicated models.

GMC are making huge profits from their trucks in the USA have fabulous reputation they earn their keep at GM deliver the goods, but Opel don't deliver a dime are a liability.

Cadillac are GM most important car brand of all, the luxury car market is where huge massive profits can be potentially made in the future could become a huge profit generator in the future. GM really need to focus on getting Cadillac done right as they are under performing big time they need to become established in places like Europe with more fuel efficient options that run well on EU $9 gas & adding RHD would help a lot, where they don't exist at the moment.
 
#24 ·
I get that right now all 4 brands do have their places in the GM line up.
But the fact is that GM's market share keeps declining. 16,9% marketshare with 4 brands when Ford does 15,6% with just two and Toyota does, I don't know, about 13% with two as well. It does spread out the marketing and development dollars a lot more.

Removing Buick from the US market still makes sense to me. It would give Chevy space to grow up market. And Cadillac could do some more volume as well. Because let's face it: if Cadillac wants to do 500.000 annual sales, it does need more accessible models. Mercedes and BMW handle this quite well. 500.000 sales will never be done with ultra premium models. Even if the Cadillac brand would be strong enough for that.

A lot of people here seem to want keep things as they are. But with the declining marketshare, it does start to make less sense. At some point, a strategic decision will have to be made at GM....
 
#27 ·
I get that right now all 4 brands do have their places in the GM line up.
But the fact is that GM's market share keeps declining. 16,9% market share with 4 brands when Ford does 15,6% with just two and Toyota does, I don't know, about 13% with two as well. It does spread out the marketing and development dollars a lot more.

Removing Buick from the US market still makes sense to me. It would give Chevy space to grow up market. And Cadillac could do some more volume as well. Because let's face it: if Cadillac wants to do 500.000 annual sales, it does need more accessible models. Mercedes and BMW handle this quite well. 500.000 sales will never be done with ultra premium models. Even if the Cadillac brand would be strong enough for that.

A lot of people here seem to want keep things as they are. But with the declining market share, it does start to make less sense. At some point, a strategic decision will have to be made at GM....
Toyota is bouncing around 14%, sometimes over, sometimes under.

Killing Buick would hurt; but IMHO it would be a short-term set-back, and regardless it would save money (make more) in the long run; not unlike what GM is trying to do with Cadillac and shunning the fleet market.

Right now Buick has about 1.2% US market share, lets say killing Buick drops GM 1% right off the bat, GM would be around 16%, but has freed up all kinds of money; SG&A and R&D to spend on Chevy, GMC and Cadillac, them being stronger would gain some of that lost back. I doubt GM will do anything yet, 5 years from now, we'll all be looking at GM and their continued struggle; juggling 4 brands and 40 models, with a market share that withered to 15 or 16%, now what?


There is only incremental long term growth in the NA market. Yes, there will be cyclical ups and downs. But, beyond replacement, there isn't a ton of people who don't have cars that need them. The key is to make every sale as profitable as possible. According to the article, GM is doing a good job at this.

Right now, it looks like China is full of new buyers -- people who don't own a car yet, but are about to be able to. That's share worth grabbing now, even at break even. Because, if GM doesn't get that customer, someone else will. Unless they have a bad experience, GM now has an uphill battle to conquest that customer. Growth markets have these land grab period where it's easier to acquire lots of new customers. Keep them and you can focus on margins later; lose the opportunity and you may never win them over.

Not sure what any of this has to do with the number of divisions GM has. It simply points out the wisdom of not chasing rental markets in the US simply for volume sake.
There is significant costs related to multiple brand channels, SG&A and R&D; basically GM Employees doing the same thing for different segments.


So, is the argument that GM's margins would be even better with fewer divisions? Maybe. Maybe not. Ford has a very different strategy with Ford/Lincoln that's both more ambitious on the Ford side and more near-term focused on the Lincoln side. Not sure how GM would replicate that simply by dropping Buick.
More of both; costs would be lower, and at the same time, product would be stronger.
 
#26 · (Edited)
Kinda' funny really.... AN split :lmao: their recent Coverage of Mr Batey - and his remarks.

I guess one is for say....... Ford and Toyota Investors and Bankster ? Fantasy Artists and the like, and the other is for Realists and or the GM friendly ???? :think::ponder::yup::faint::lame:

----

The better one is here, which also includes a much fuller interview -

Including but not limited to....

Overall share is down more than a point. At some point, does GM need to worry about stopping the bleeding?

No, because from our perspective we're in a really good situation. Our days supply is low. We're growing retail share and our brands. I'd be really nervous if I was cutting back rentals but my retail share was also declining. What I'm doing right now is taking them out of rental and putting them into retail.

But we've got a lot of vehicles we're launching this year. By the end of the year, we may be down a little, but it won't be a lot.

Are you worried about getting uncomfortably close to Ford in market share? Would it bother you to lose the top position?

I don't think it's going to happen. Ford has gained market share this year, but it has all come from fleet. Their retail business is down. At some point, that is a very dangerous strategy because you're putting a lot of pressure on your new-car business. You have a lot of vehicles coming back. Your residual values are put under stress, which puts stress on your ability to lease competitively. I've seen that movie. I've probably played in that movie. It never ends happily.

Pickup sales have been hot. But is there reason for concern with the Detroit 3 adding capacity?

On full-size pickups, we took share last year. We've started the year and we're taking share again. We've not added any bricks and mortar but we've continued to innovate and squeeze out as much as we can.

If you look at some of our key competitors, you'll see that they're running a much higher days supply than we are. I'd actually like a little bit more to be honest. We're probably not getting all the opportunities that are there. But I'd rather be where we are than having to oversupply.

Ford and FCA eventually will come at GM with midsize pickups and SUVs. Is GM ready?

Since we went into the midsize segment, it's grown. Being there first is a huge advantage. We've been able to drive the best [average transaction prices] and we've been gaining share. Having more competitors will actually continue to grow the segment.

We've been here before. When Nissan and Toyota decided to get into the full-size pickup market, people said, "You're going to have these competitors coming and adding capacity." That's played out.

I'm really pleased with our performance against the F-150. It was supposedly going to be the game changer. We've taken share from the F-150 and we've grown midsize. But we've got to keep innovating. They'll come at us with good product, there's no question. -

Much more good stuff @ the link



http://www.autonews.com/article/20160523/OEM08/305239992/1401
 
#30 ·
Sounds like a lot of people complaining about market share owns stock and thinks that will make stock go up. Sorry that is the old way not the new way. You need to make money and have money on hand. Market share means nothing if you aren't making money. They are doing the right thing making cars people like and the people paying for them.

Like I said before i'm glad many of you don't run GM it would be in the toilet. Buick has proven most wrong about the cascada already and they will with the envision again.
 
#33 ·
This discussion isn't about stocks, IMHO.
It's about if 4 brands are really effective considering GM's market share keeps shrinking, for whatever reason. 4 brands for 17% market share doesn't seem effective to me.
Sure, the stock may be influenced by dropping Buick (or not). But that's not really what we were discussing here.
 
#35 ·
Actually, that isn't true................. really.

Currently, it doesn't matter how well "run" your automotive business is. Short of Tesla, nobody will give automotive stocks a break due to the lack of growth potential. Being wildly profitable isn't enough in the flaky world of stock purchasing. You have to constantly grow. In a mature market like automotive sales, that is next to impossible to do.

GM seems to be trying desperately, to get their stock price up by doing everything that "the analysts" deem necessary. Yet, nothing moves much. It makes one wonder if someones stock options are becoming mature, or what. Trying to get the stock market to move on domestic auto manufacturers (short of Tesla) seems like a fools errand.

Could GM do better................. yep. Yet, with quarter after quarter after quarter of record profits, Ford can't move the needle at all (of course, they will always be punished for family control). Higher profits than GM on lower volume and revenue means nothing. It is always said, what have you done for me today. Yet, when auto stocks are involved, it seems to be "what will you do for me 5 years from now," which is ridiculous.
 
#46 ·
Good Points.

Ford and GM have similar problems with Wall Street.

Ford is locked into being a single brand forever and will ultimately put a very hard ceiling on Ford's global growth potential and Ford cannot do a thing about it.

GM is held back as Wall Street sees GM actively destroying Buick/GMC/Opel's global potential when they are the brands key to GM's future profit growth.

Five to Ten years from now any Global Automotive company will need at least 4 brands if not 5 or 6 and Wall Street wants to see GM move to a 4 to 6 brand model in order to provide the global sales revenue growth required to compete with Nissan/Renault, Toyota, VW and others.

GM is in the best position of any Auto maker with it's current brands, but has yet to maximize their true global growth potential.

Unlike Ford, GM can grow large enough to not only keep up with the rest of the industry, GM can be the number one automaker, it just has not figured it out yet.

Trust me, GM's global competitors hope they never do.
 
#38 ·
Auto Stocks huh. Are we all forgetting less than 10 years ago? Too Big to Fail, well everyone but those who were invested in Stocks of the General.

They still don't give me a warm comfortable feeling.

How ever I do regret not trying Ford when it was at $3.00, even without Government backing.
 
#40 ·
Financial analysts have to know that GM is deep into electrification, hybrids, autonomous driving, Lyft, more Xovers, exploring the future of all kinds of tech, reducing rental fleet sales, etc.
ALL of which bodes well for the future. And yet stock prices languish as if they were producing nothing but Azteks, no capital reserves, riddled with debt, all V8 engines, 4 speed transmissions and are still hammered by CR and JD Power. Fascinating.
 
#41 ·
Well we really don't know what (good) autonomous driving is going to do for the OE's, but on the surface it seems like (for many) cars will become a utility; pure appliance, more than they already are; unless you pick your City Bus or Taxi, based on its exterior appeal, body-lines and amenities.......... which does tie directly into the likes of Uber & Lyft, IMHO at best that is a hedge.

In the near term, the overall economy and fuel prices have a lot more to do with how well GM does, than anything else, and now that cars can (and do) last a long time, if things get tight, people will just keep the car they have like last time, but likely more-so.
 
#49 · (Edited)
Sorry, late to the discussion but re GM comments,

It's kind of funny and sad to hear Batey calling out Ford for going after fleet sales,
yet Ford just smaked GM in the gob with it's fleet laden Q1 financial result.

GM's problem has never been income, it's always been spending and special items,
stop looking at fleet as "bad" and start looking at the huge sumes of money that
are reserved for Cadillac ($12 Billion over 4 years) and understand that GM is now
tightening up those retail sales because it needs that extra revenue to cover its now
obligatory outgoings.....

The two companies are now in very differnt places with costs and product cycle expenditure,
GM is steadying areas it sees as less profitable where asd Ford is adding fleet sales to Q1 and Q2.
There really is no direct compoarison line for line, figure for figure.... only the bottom lines are important.
 
#51 ·
Sorry, late to the discussion but re GM comments,

It's kind of funny and sad to hear Batey calling out Ford for going after fleet sales,
yet Ford just smaked GM in the gob with it's fleet laden Q1 financial result.

GM's problem has never been income, it's always been spending and special items,
stop looking at fleet as "bad" and start looking at the huge sumes of money that
are reserved for Cadillac ($12 Billion over 4 years)
and understand that GM is now
tightening up those retail sales because it needs that extra revenue to cover its now
obligatory outgoings.....

The two companies are now in very differnt places with costs and product cycle expenditure,
GM is steadying areas it sees as less profitable where asd Ford is adding fleet sales to Q1 and Q2.
There really is no direct compoarison line for line, figure for figure.... only the bottom lines are important.
Good points.

GM's current problem is illustrated by continuing to dump $12 Billion into a brand that has not delivered the sales revenue to recoup the costs.

Had GM spent that $12 Billion on the Buick/GMC/Holden/Opel/Vauxhall "Global Brand" it would already be well ahead of Ford in earnings and on track to surpass Toyota.
 
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