GM Won't Cut Profits to Pick Up Market Share

08/05/96

In the 1960s and 1970s, General Motors' share of the domestic vehicle was more than 50%. Since that time, however their market share has been shrinking. In fact, David Healy, an analyst at Burnham Securities Inc., predicts that GM's combined truck and car market share will fall to 29.7 percent in July, down from 31.2 percent in June.

For their part, GM has said that they want to get their market share back up to 35% of the U.S. car and truck market. The automaker has several new mid-sized car and minivan models which they hope will help accomplish that goal, but the world's largest automaker insists that it will not sacrifice profits to reach the goal of bigger market share. Speaking about the corporation's quest for greater market share last Wednesday, GM Chairman John Smith, said "The driving factor is whatever we do, we want to do it profitably."

GM's declining market share can be pinned on many factors, such as competition from Japanese imports, a miscalculation of consumer tastes, and cutting back on less profitable sales to fleet dealers (i.e., rental car agencies).

Smith said he was not backing away from the 35 percent goal that GM's president of North American Operations announced for the corporation last August. Nonetheless, Smith said a specific goal was not the firm's driving factor: "There's room to take share, there's no question about that in my mind, and hopefully we will," he said.

In the 1997 model year, GM will introduce more than a dozen new vehicles, nearly all of them cars. The company will also re-enter the booming U.S. minivan segment with three new models.

Paul Dever -- The Auto Channel