Bloomberg News

GM Expects ‘Modest’ U.S. Market Share Gain in 2013: CEO

January 09, 2013

CEO of General Motors Co. Dan Akerson

Dan Akerson, chief executive officer of General Motors Co. (GM), speaks at a news conference in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

General Motors Co. (GM:US), armed with new products such as a redesigned Chevrolet Silverado pickup, should see “modest” U.S. share growth this year after falling to an 88-year low in 2012, Chief Executive Officer Dan Akerson said.

Akerson is introducing 13 new Chevrolet models this year in the U.S. while fighting to end losses in Europe and managing operations in China, the company’s biggest market, where the economy is slowing.

“It starts and ends with product, that’s what we’ve been focused on since bankruptcy,” Akerson told reporters at the company’s Detroit headquarters. This year and next “will be good years, not only here domestically but on an international basis.”

Under Akerson, GM’s U.S. market share last year fell to 17.9 percent, the lowest since 1924, Alfred P. Sloan’s first full year running the automaker. The company’s share decline came as some competitors, including Toyota Motor Corp. (7203), rebounded from production constraints following natural disasters in 2011.

“If we don’t grow faster than the market we’re not taking market share by definition, so I do think we’ll grow faster than the market,” Akerson said in advance of next week’s North American International Auto Show. “Certainly that’s our hope and that’s our expectation.”

GM gained 2 percent to $29.97 in New York, the highest closing price since July 22, 2011.

While Akerson is optimistic, GM’s share may hold steady this year compared with 2012, even with the new models, according to a Bloomberg survey of five analysts.

Product Surge

The company is refreshing 70 percent of its U.S. lineup over a year and a half, including a redesigned Impala full-sized sedan and Corvette sports car.

Along with the new product surge, Akerson is pushing GM to improve operating margins, improve customer service and revamp the automaker’s corporate structure to align its business around Chevrolet and Cadillac brands globally and away from regional operations.

Akerson said he sees GM’s international operations, which include China, growing 5 percent this year while its South America business will be little changed.

Europe, where industry sales have fallen to the lowest in almost two decades, will continue to be a challenge for GM. The automaker has struggled to stop losses in the region with its Opel brand.

“We see the market weakening,” Akerson said. “Germany looks like it could be slipping into recession.”

‘Biggest Risk’

GM has said it expects to report a loss of $1.5 billion to $1.8 billion in Europe for 2012 after posting losses in the region since 1999 totaling $17.3 billion as of Sept. 30. The automaker said in October that it expects “slightly better” results this year and intends to end losses by 2015.

“The single biggest risk to GM’s success is the continuing losses and management distraction at Opel,” Adam Jonas, an industry analyst with Morgan Stanley, said as the lead author in a note Jan. 7 to investors.

GM wants to improve European results through an alliance with Paris-based PSA Peugeot Citroen (UG) and shuttering its plant in Bochum, Germany, in 2016, which would be the first car factory closing in that country since World War II.

While GM and PSA didn’t reach agreement on developing four products together as originally intended, Akerson said today he’s optimistic about the alliance’s progress and expects logistic, purchasing and development savings by mid-decade.

‘Net Positive’

“Somebody asked me a question: What if the French owned more of Peugeot?” Akerson said. “Well, you know, if they own more of Peugeot and they’re still building cars and they want to be as efficient as possible, our alliance is a net positive in their progress, just as it’s a net positive for General Motors. I presume we’ll continue down the same path.”

Even with some down markets, Akerson said, GM’s cash allows it to continue to invest $8 billion annually in product development.

By mid-decade, Akerson said he wants all five of GM’s units to be profitable or breakeven and for margins on adjusted earnings before interest and taxes to be “competitive” with the industry’s best.

“We have to be profitable in everything that we do,” he said. GM posted net income of $9.19 billion in 2011.

GM also is seeking to regain an investment-grade rating this year, Akerson told reporters.

The automaker currently has ratings (GM:US) of BB+ from Standard & Poor’s and Fitch Ratings and Ba1 from Moody’s Investors Service, the highest non investment-grade ratings from the three companies.

GM wants to secure an A debt rating by the middle of this decade and for shares to become “a blue chip investment by mid- to maybe just after mid-decade,” Akerson said. “I want to see the best customer retention in the industry.”

To contact the reporter on this story: Tim Higgins in Detroit at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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