GM, Chrysler Still Weak As Ford Could Win Share, Report Forecasts
By Michelle Krebs July 16, 2009General Motors and Chrysler will be challenged by weak future product plans while Ford
stands to gain market share with a relatively strong future product plan, a new report says.
Called Car Wars, the annual competitive analysis is produced by Banc of America Securities-Merrill Lynch and reported on by the Detroit Free Press Thursday, predicts:
- GM's market share losses will be greater than the automaker expects because of its skimpy future product plan;
- Chrysler's weak product pipeline is "an ominous sign"
- Ford's relatively strong future product plan could help it gain market share.
In the report, the forecasted product replacement rates at GM and Chrysler over the next four years rank at the bottom of the industry at 11 percent and 8 percent, respectively.
As a result, GM's market share losses are likely to be greater than expected because the company is not replacing its lineup as fast as the industry and key rivals, the report concludes. GM had a 22-percent market share at year-end 2008 and predicts its share will settle at about 18 percent, despite having only four brands - Chevrolet, Cadillac, Buick and GMC -- after emerging from bankruptcy. Report author and analyst John Murphy says 15 to 16 percent is a more reasonable target.
Chrysler's weak product pipeline is "an ominous sign" and is expected to drive "significant market share losses." The report said Chrysler could be roughly half of its current size "within the next few years."
Ford's relatively strong replacement rate and lower average showroom age could help it pick up market share. Its product replacement rate is estimated at 25 percent over the next four years, the result of planning as well as stress on its two main competitors, the report noted. That's a level above its historical average of 15 percent and better than the industry average of 18 percent.
Ford is forecasted to replace 99 percent of its lineup of cars and trucks from 2010-2013, which will lead it to gain market share, the report said. Ford's annual replacement rate of about 25 percent during that period is above its historical average of 15 percent and better than the industry average of 18 percent.
In a separate report the Free Press noted, Murphy wrote study "bolsters our confidence in Ford."
Not surprisingly, GM and Chrysler vehemently disagreed with the report. GM told the Free Press the report was overly simplistic and questioned its accuracy of the report's assumptions about the automaker's secret product plans. A Chrysler spokesman told the newspaper the automaker had no intention of being half of its curent size.
However, the last Car Wars report was dead on. The last report predicted Chrysler's lack of product indicated that its parent company was trying to sell off the automaker. Within a few months, Chrysler's owners were looking for a partner or new owner, which it eventually found in Fiat.
Photo by Ford
1 - The Car Wars report says Ford has a relatively stronger future product plan, which includes the pictured Ford Fiesta, compared with GM and Chrysler.
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Fiat should be able to inject some product diversity into the Chrysler portfolio, something they desperately need. I'll say it again, GM should have dumped GMC if Fritz truly doesn't like badge engineering. And Ford I've been happy with.
GM hasn't had the money to introduce new products, save for the new Camaro and souped up Cadillac and Corvette. The rest of the lineup looks tired, particularly compared to other automakers.
Oh, I forgot--the Volt will save us all! Except that I'm perfectly happy with paying $16,000 for a Kia that gets 33 mpg, rather than $40,000 for a Volt.
I tend to think most people feel the same way.
The bigger question is whether Chrysler can hang on long enough to get the new product promised by Fiat. It's looking less and less likely every month.
I agree with Murphy's assessment that GM market share will level out at 15-16%.
Oldsmobile customers didn't flock to other GM brands, and I don't believe Chevrolet and Buick will pick up much of the slack lost from Pontiac and Saturn. Indeed, Saturn sales could very well hurt GM's share in the future.
Add in the messy dealership termination disputes, the still remaining plant overcapacity as told by Bill Visnic and 16% sounds generous.
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