The Bailed-Out Two and Who? AP Report Nearly Ignores Impact of Ford on GM's Market Share Erosion

July 6th, 2009 2:16 PM
FordNotGMorChrysler0709

In the later paragraphs of a story today about the latest hurdle bailed-out General Motors has managed to jump to get out of bankruptcy, the Associated Press's Bree Fowler almost totally ignored the impact of Ford's improvement largely at GM's expense during the first half of 2009, acting as if GM's decline has almost solely been the result of defections to foreign competitors.

Fowler's only mention of Ford comes in connection with its new, apparently redesigned Fiesta. Fowler makes it appear to the relatively uninformed reader that the Fiesta is appearing on the market for the first time.

Here are the four paragraphs in question from Fowler's foul-up:

In June, the automaker captured 20.3 percent of the U.S. market. GM has estimated that it can maintain a market share between 15 and 17 percent, reflecting its plan to sell off three brands and end its Pontiac line.

GM has several new cars coming to market next year, including the Chevrolet Volt, a plug-in hybrid electric car. The Volt might be a promising vehicle, but with an expected $40,000 price tag it might only be a niche player, said James E. Schrager, clinical professor of entrepreneurship and strategy at the University of Chicago Graduate School of Business.

Upcoming small-car models such as the Chevy Cruze and Spark may fare well, but will face heavy competition from foreign automakers already in that segment of the market and from Ford Motor Co.'s new Fiesta, which the company has already started advertising.

Overall, GM's major challenge will be winning back customers who have migrated to foreign competitors. Some newer GM models have received good reviews for quality and performance, but that hasn't persuaded enough consumers to buy GM cars.

Please. Acting as if there has been no migration from GM to Ford is flat-out ignorant, as the following chart shows:

VehicleSalesOfBig4June07toJune09

(Source Data: Wall Street Journal monthly Auto Sales Chart for June 2009 and June 2008; USA Today for Dec. 2008 and Dec. 2007; Web-Archived WSJ Auto Sales Chart for June 2007)

Since GM started positioning itself for a bailout a year ago, and then began taking bailout money from the government in December:

  • Ford has in the past six months gained even more "Big 4" market share (4.9%) than GM has lost (4.0%). For all of its considerable cost problems, in the 18 months leading up to the bailout, GM's sales standing compared to its three largest competitors had actually improved.
  • Ford is the only "Big 4" company showing a December-June unit sales increase.
  • As seen at this Wall Street Journal detail of June 2009 sales, Ford outsold GM in light trucks for the first in many, many years (93,791 to 91,495). That should be huge news.
  • That Wall Street Journal detail also notes that Ford's overall market share has gone from 14.0% to 17.2% in the past year, an increase of 3.2%. GM's share has slipped 1.7%. Ford gained more than GM lost, and yet Fowler doesn't mention Ford as a factor except as it relates to a new model.

There is little doubt that foreign competitors other than Toyota have also nibbled away at GM's once-commanding lead in the market. Their overall market share has increased by 5 points in the past six months. But for Fowler to pretend in light of what has transpired that Ford barely exists is ignorant at best, and disingenuous at worst.

Cross-posted at BizzyBlog.com.