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Same-Day Analysis

GM Global Sales Dip 1.0% in 2006

Published: 18 January 2007
GM sold more than 9.0 million units in 2006, for only the third time in its history, but strong growth in Asia is offset by lacklustre sales at home.

Global Insight Perspective

 

Significance

General Motors (GM) has announced global sales results for 2006, coming in 1.0% lower than 2005 but showing strong growth in markets outside North America.

Implications

Success at home is still elusive as the company continues its painful restructuring and brings new and improved product to market, but with GM's growth in China outpacing that country's overall average auto market growth, the company looks to be in a good position to capitalise on global growth markets.

Outlook

Continued globalisation and consolidation of platforms will continue in 2007, as more vehicles on shared platforms start to come online, such as the shared Opel/Saturn connection. With the only significant growth globally expected to come in the Asia-Pacific region, GM's use of Daewoo and China-exclusive vehicles positions it well to take advantage of those opportunities.

General Motors (GM) has announced that it sold 9.09 million cars and trucks globally for 2006, down 1.0% from the 9.17 million it sold in 2005. The drop reflects a number of issues, including a planned 75,000 unit reduction in sales to daily rental fleet organisations. That reduction also included a nearly 8.7% drop in sales in the U.S. market, down nearly 400,000 units from 2005.

Global sales, however, fared better for GM than domestic sales. “GM had some notable sales successes as we continued to expand in key growth markets around the world in 2006,” said John Middlebrook, GM vice-president, Global Sales, Service and Marketing Operations in a statement from GM. “In 2006, we saw 18 per cent growth in the Asia/Pacific region, and 17 per cent growth in the Latin America, Africa and Middle East region. We’re also seeing improving results in Europe where we sold more than 2 million vehicles for the first time.”

The Global Brands Improve

GM has made a concerted effort to increase the penetration of four global brands, and is pointing to increased sales of the brands as signs of "concrete success." Chevrolet saw a modest increase from 4.30 million vehicles to 4.37 million, with the biggest increases seen in the Latin America, Africa, and Middle East region, totalling an additional 19% (144,000 units) over 2005. Chevrolet also posted a 19% gain in the Asia-Pacific region and 15% in Europe.

Hummer sales grew by 34% in 2006, up from 61,000 units to 82,000 units, fuelled primarily by the strong performance of the H3 sports-utility vehicle (SUV) in the United States. Sales in the United States grew by 26%, but strong growth was also experienced in the Mexican and Canadian markets.

GM's two luxury brands also experienced growth, with Saab sales setting a record at 133,000 vehicles, and experiencing its highest European sales ever, at over 90,000 vehicles. Cadillac had a significant year outside the North American market, due largely to a 22% increase in European sales.

The Boom in Asia-Pacific

The majority of the sales increases came for GM in the booming Asia-Pacific region, including an increase of nearly 32% in China alone. For 2006, GM sold more Buick brand vehicles in China than it did in the United States, posting 304,000 in China versus 241,000 in the U.S. GM's growth in China is outpacing the 26% industry growth rate that the country is experiencing, and remains that country's top-selling automaker with a volume of 877,000 vehicles.

GM's Holden division strengthened its second-place position in Australia, selling 147,000 vehicles. The Holden Commodore, the vehicle rumoured to become the 2008 Pontiac G8 sedan, remained the best-selling car in the country for the 11thconsecutive year.

Outlook and Implications

GM is capitalising on a couple of elements in order to secure its position globally. Its strength in China is something the company is focusing heavily on, given that the region represents the biggest growth market on the planet for the foreseeable future. Cadillac is starting to offer Chinese-exclusive models such as the SLS luxury sedan, and the success of Buick in China (over 100,000 more units sold there than in the United States) underscores the popularity of foreign luxury models in the Chinese market. Furthermore, GM is leveraging its control over Daewoo to produce small cars that are also proving popular globally.

GM's success abroad only puts a more stark contrast on the struggles at home. Recent product introductions at the 2007 North American International Auto Show in Detroit earlier this month however have given analysts and media increasing confidence in GMs product-led turnaround at home. The new Cadillac CTS should be competitive on a global level in its segment, with a build quality, interior material palette, and driving dynamic that should rival the best in the segment. The volume-leading midsize sedan segment in the United States should see a serious competitor in the new Chevrolet Malibu as well.

Internationally, GM continues to consolidate platforms and increase the usage of global designs among multiple markets. The Opel line-up is the best example of this, as much of the line-up will be (or already is) used for the Saturn brand line-up in the United States. The next Zeta platform currently being developed by Holden is likely to form the basis of the Pontiac G8 sedan, replacing the long-running Grand Prix and sending that vehicle to a rear-drive platform. The same platform will also underpin the upcoming Chevrolet Camaro and Impala after 2009. With gasoline (petrol) prices dropping and GM's full-size trucks showing decent sales in their redesigned form, GM's previous outlook that it will at least hold its volume for 2007 looks to be a good bet. But with Toyota on a global tear and volumes in 2007 expected to pass GM, a race to be number one could be in the works.

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