Is Misplaced Focus on Chevy Volt Costing GM Market Share?

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Another important story goes unreported by TV networks receiving millions of dollars in ad revenue from General Motors. Viewers getting their news from Obama-friendly sources continue to hear about how great GM is doing. For those getting their news from internet sites not beholden to Government Motors, the reports aren't as good. March US market share for GM fell to 17.5% in March, the lowest level for "Old" or "New" GM since 1922.

One has to wonder if the political motivations at GM are hurting the company. A good deal of GM's multi-billion dollar marketing budget went towards promoting the Chevy Volt, a car that loses money for the company and its shareholders as it only sells a couple of thousand units a month. In addition to the company's perplexing political focus on a mostly unwanted and entirely unprofitable car, GM has been offending Republican and conservative prospective auto purchasers by taking a strategy from the Obama playbook and vilifying the group for supposedly promoting a right wing conspiracy to hurt Volt sales. Of course, this is nonsense, and the move may be further contributing to a boycott of GM products by those who object to the political nature of the company.

The March sales figures for GM saw Buick and Cadillac sales plummeting as GM alienated conservative buyers and tried to focus on hip, liberal consumers. The Volt sold 2,289 units, a number touted as a success by political proponents and math-challenged fans of the vehicle. I guess that the same crowd that falsely proclaims great gas savings for the vehicle also can't do the simple math that would indicate that GM will fall well short of its 2012 sales goal of 45,000 at this level of sales. Here's a little help; 2,289 (Volts sold in the month) times 12 (months in the year) equals 27,468, and there are only 9 months left in the year. Cronies at General Electric will need to kick up purchases to give the appearance of success for the car as elections approach.

One area of growth for sales at GM was in the large truck and SUV segment. This is important to GM as it is the most profitable segment. Government share of the unusually fast growing sales were not disclosed by GM. Analysts on GM's sales conference call did not ask what the government's percentage was, nor did they ask why GM is spending such a disproportionate amount of time and money promoting the unprofitable Chevy Volt.

What might be more evidence of GM's misguided focus surfaced as Car and Driver did a comparison test on six family sedans. The Chevy Malibu Eco finished last. The car was criticized for having a "claustrophobic cockpit" and not being much fun. The claim to fame of high gas mileage by GM on the vehicle also left testers unimpressed as three higher rated cars got the same mileage. Perhaps GM should have focused on the most important category for car sales instead of on a seldom-selling, plug-in, "green" segment that does nothing to help the company's bottom line. The good news for the patriotic fans of GM is that all the cars that performed better than the Malibu in the Car and Driver road test were made in America, so purchasers can buy them with a clear conscience. And apologists for GM can spare the insincere patriotism defense.

The unprecedented presidential campaign largely based on the perceived success of a nationalized company is sure to continue to influence events at GM. How far will our government go to ensure the appearance of success at GM? Stock of GM is down over 10% since the trumpeting of March Chevy Volt sales resulting in a loss of share value for taxpayers of about 1.5 billion dollars since then and Treasury refuses to sell until after election time. Does the Obama Administration have any tricks up its sleeves to pump up share price, considering the importance of GM to the President's campaign?

Maybe GM will just keep up the public relations push, continuing to boast about global sales leadership even though they finagled a deal with their Chinese affiliate so that GM could claim all China sales while owning only one third of the division. A few more awards might be in order for the Volt and other GM vehicles as well. An increase in incentive spending to regain market share is also likely. Throw in loosened lending standards by GM Financial and government-owned Ally Financial and sales might get a boost. Whatever the case, an apparent failure is not an option for GM; at least not until after November.

Mark Modica is an NLPC Associate Fellow.