On August 24th, the CARS program (more affectionately known as 'Cash for Clunkers') ended. The program was rolled out to generate sales to the distressed North American car industry (and the economy in general), while putting more efficient cars on the road.
Was it well received? Very much so. Who doesn't like free money* after all? In fact, the initial funding of a billion dollars was exhausted in a week. A further two billion was quickly infused into the program, which allowed it to reach the one month mark before closing.
In total, the DoT reported that 690,114 deals went down, good for about 2.9 billion worth of stimulus. Many critics of the program feared that the program merely dragged forward future sales and really did not generate anywhere near that many 'new' sales and that a wake would be left in months following it.
The industry as a whole did indeed report growth...over 1% worth, with small car maker Hyundai naturally receiving the largest boost, up 47%. Also faring well were Ford (+17%), Honda (+10%) and Toyota (+6%). However, our own GM pulled up the rear, reporting year over year sales of 246,479, good for -20%. A look at the top selling vehicles in the CARS program gives a glimpse of part of the problem:
1. Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape
You will notice, there is not a GM vehicle to be found on that list. Of all sales generated, only 17% of the CFC deals went down at a GM dealership, and of those, a good bulk fell to 'dead brand' Pontiac.
Breaking down August's -20% monthly sales number at GM, we find Pontiac reported a 23.3% sales increase, while survivors (and unlikely beneficiaries) of the CARS program Cadillac and Buick, were off 55% and 52% respectively. (GMC and Chevrolet were off 45% and 9%)
Looking ahead, GM has a couple big issues. For starters, Pontiac sold 30,000 odd cars last month, which leaves them with only about 15,000 left in new car inventory total before they slip quietly into automotive history. In fact, the 'dead brands' made up about 1 in of every 6 sales for GM last month. GM is so concerned about the orphaned customers of these brands, or 'free agents' if you will, they have recently set up a special task force to try and rustle those costumers back into the fold.
Even before the loss of the 'dead brands' themselves are felt on the monthly sales, GM's market share has plunged from 24.7% to 19.5% in the last 12 months.
On top of the future loss of 'free agents' (about 15% of GM's business YTD), they now face the vacuum the CARS program has left, which primarily benefited Japanese auto makers (and Pontiac clear outs).
What did newly promoted, vice president of rose colored glasses U.S. Sales, Mark LaNeve, have to say about all of this and GM's diminishing share?
"The Cash for Clunkers program was certainly a success, but our momentum continues to build on the strength of our new cars....our four core brands - Chevrolet, GMC, Buick and Cadillac - (which) are well positioned with new products to take advantage of the ongoing recovery in the market." Mark continues to bat a thousand with optimism on the monthly sales results and forward looking statements.
Inside the same press release, the the usual paradox between reason and the words coming out of Mark LaNeve's mouth presents itself. Mark announces that current production of cars for the quarter is set at 535,000 vehicles, and will be 655,000 for Q4 2009. Which of course means to any of us that are good at math, (and/or own a calculator), if GM sells every car they make, they will still average about 40,000 less than they sold this month.
Normally your supposed to wrap these articles up with some hope, so what is the answer? Is it the Voltec project(s) going to lead the charge at the 'new' GM and turn things around? It might. Unfortunately volume and profitability for this platform are a long way off, and there isn't any new products that can fill the gap in the meantime...unless the new Equinox (and its legion of rebadges) are going to sell 1.5 million copies in 2010.
GM is going to need a lot more help from you and me (the taxpayer) to get there, so are we in? Or out? Do we even have a choice? Next up...the DoE loans.