GM has a "huge opportunity" with the new products it will launch this year, insists Pres. Mark Reuss.
General Motors Co. is poised for a major breakout that will transform the company over the next 18 months, according to the head of the company’s core North American operations.
Mark Reuss, president of GM’s North American Operations, described as a “huge opportunity” the flood of new products the maker plans to introduce over the next several years, refreshing what he acknowledged is currently “the oldest product line” in the industry right now.
There are already significant signs that GM’s push to update that line-up is taking hold, the maker noting that it was the first to sell more than 1 million vehicles in a single year that get an EPA-estimated 30 mpg or better on the highway.
“Our product portfolio is now the oldest in the industry (but) we’re going to have the biggest change in our product portfolio in our history. It’s a huge opportunity for us,” noted Reuss, who said GM was already challenging Asian brands in segments where fuel efficiency is of primary importance.
Even with the current line-up, the executive insisted GM is more than holding its own. Its average transaction prices — the amount consumers actually pay for a GM vehicle — have gone up this year despite the maker increasing incentives on select older models.
And while those givebacks have, on the whole, increased this year, Reuss argued they are not out of line with those offered by the competition. And in contrast to those years leading up to GM’s 2009 bankruptcy, the company’s North American operations remains profitable, he said.
The upcoming Detroit auto show will be a critical one for GM which is planning to use the event to reveal several key models – including the all-new halo car, the seventh-generation, or C7, Chevrolet Corvette. But a wide range of additional products will reach market this coming year, including replacements for the aging Chevy Silverado and GMC Sierra pickups.
“It’s a huge opportunity for us,” said Reuss. “We want both market share and profits,” he said.
The past year saw GM market share slip a bit, nonetheless, sales did climb 3.7%.
“All four GM brands increased their sales year over year in December, and we were strong across the board in cars, crossovers and pickup trucks,” said Kurt McNeil, vice president of U.S. sales operations.
Cadillac offered a signal the new product offensive may take hold. Though it failed to deliver the turnaround some executives had promised, the luxury brand did deliver seven consecutive months of sales increases as new vehicles, such as the new XTS full-size and ATS compact sedans, began to find more buyers.
Nonetheless, outside analysts were cautious.
“In a strong year for the auto industry overall, GM struggled to hold up its end in 2012. Its year-over-year growth is well under the industry average, and the company couldn’t hold on to market share gains it enjoyed in 2011,” said Jessica Caldwell, a senior analysts at Edmunds.com, which tracks sales and new cars.
Efraim Levy, equity analyst for Standard & Poor’s Capital also raised concerns, noting that while GM beat Ford’s 1.9% gain for 2012, it lagged Volkswagen AG’s 35% increase, Toyota’s 13% and Chrysler’s 10% increase.
But the analyst does see opportunity for the year ahead. “We see GM benefiting from its broad product refreshment in 2013. We believe a growing economy, an aging vehicle fleet, new products and widespread credit availability, supports industry sales gains,” Levy said.
Tom Libby, a senior analyst with R.L. Polk in Southfield, said the competition in the auto industry is very intense right now and despite its new products, GM won’t simply be able to walk in and gobble up more share. After a soft year in 2011, Toyota raised its market share in the United States nearly to 14.4% from 12.9%.
In addition, all of the top eight manufacturers competing for sales in the United States will be introducing more and more new models over the next 18 months to 24 months, Libby said.
GM said last month it was in the midst of cutting its ties to the U.S. Treasury Department, which since 2009 has held a controlling interest on behalf of U.S. taxpayers.
General Motors plans to spend $5.5 billion to buy back about 40% of the U.S. treasury department’s remaining stake in the big automaker. The share buyback is part of the Treasury’s plan to fully exit its entire holdings of GM stock within 12 to 15 months.