Photo: GM
As General Motors continues to remake itself in the wake of its 2008 bankruptcy, it appears than in its drive toward electrification and its emphasis on high dollar trucks and SUVs, the auto giant is leaving behind the mass market.
It’s quite a change for what was the world’s largest automaker, with a run that spanned over three quarters of a century, from 1931 to 2008. At its height, GM boasted 13 separate automotive brands, built cars in 34 countries and sold them in a total of 140 around the world.
In 1924, Alfred P. Sloan, the president of GM and architect of its divisional organization, famously said that GM offers “a car for every purse and purpose.” Its dominance in the U.S. market was so complete that the corporate motto in the late 1950s was “60 for 60” meaning it would capture 60 percent of the American market by 1960.
Today, GM’s share stands at just over 15 percent. Last year, for the first time in 90 years, it was surpassed in its home market as Toyota moved into the top slot with 2.3 million sales to GM’s 2.2 million. While being the sales leader comes with bragging rights, that honor alone doesn’t necessarily ensure profitability.
Rather than volume, auto makers are increasingly attuned to profit margins rather than looking to volume to deliver the profits needed to keep the lights on. GM took a big step in that direction by shedding divisions as early as 2002, when it closed Oldsmobile, even though that brand two years prior had celebrated its centenary. Arguably, it was the Curved Dash Olds that put America on wheels, predating the Ford Model T.
The 2008 government-managed bankruptcy saw GM shed Pontiac, its barely two-decade old Saturn division, and even newer Hummer operation. Globally, GM would eventually sell off Saab, Opel and Vauxhall and no longer manufacturer Holdens in Australia. Buick is being kept alive by dint of its popularity in China—it sells only four models in the US., all SUVs in the Encore, Encore GX, Envision (imported from China) and the Enclave. In China, it sells 27 models including the Verano, Regal and LaCrosse sedans it no longer sells here.
That paring back of the Buick lineup to just SUVs underscores the new focus of the modern-day GM. Its efforts are geared at the most profitable model lines, particularly SUVs and pickup trucks, while it abandons other segments, like traditional midsize and large sedans, compact hatchbacks and minivans. In addition to Buick dropping all sedans, Chevrolet no longer sells the Impala or Sonic, is dropping the Spark subcompact in August and sells the Malibu primarily as a fleet vehicle. The only traditional cars left in the lineup are performance models, the Camaro and Corvette.
Even its drive toward electrification is geared primarily at the upper segments. GM does offer the affordable hatchback Chevrolet Bolt and Bolt EUV crossover that starts just over $30,000. But its next generation electric platform using its Ultium batteries is coming to the market in the form of the GMC Hummer EV and SUV, Cadillac Lyriq SUV and Chevrolet Silverado. The GMC Hummer EV2 will be the base model when it hits the market later this year and will carry a sticker price of nearly $80,000. The range-topping models easily cost more than $100,000. The Lyriq will start at $60,000, and while the Chevy Silverado electric pickup will likely have a sub-$50,000 work truck version, most of the volume will probably be in higher and more expensive trims geared to the personal use market.
GM’s march upmarket away from volume segments can be seen in its average transaction prices. According to Kelley Blue Book, last month the average price for a GM vehicle was $52,206 nearly $6,000 more than the industry average of $46,404. American Honda, which still sells compact Civics, midsize Accords and the Odyssey minivan, vehicles that service a wider range of customers, clocked in with an average transaction price of just $35,509. Toyota, the new American sales king, is slightly higher at $39,718, but still well below industry average.
That’s not to say that GM is alone is cherry picking the categories in which it chooses to compete. Both Ford and Chrysler (the U.S. portion of the Stellantis group) have been cutting back on sedans and compact economy cars to focus more on SUVs and trucks. That too is reflected in their average transaction prices. Stellantis is higher than GM at $53,154, according to the Kelley Blue Book data, while Ford is lower at $50,675. Keep in mind that the Stellantis number also includes some high dollar European brands like Maserati and Alfa Romeo.
It’s left to primarily the Asian brands to serve the whole of the market. In addition to Honda and Toyota, brands like Nissan, Subaru, Hyundai and Kia continue to offer a wide range of vehicles geared towards the lower price segments. As a result, their overall share of the market has grown at the expense of former industry giants like GM.
This trend is likely to continue. With just four brands selling vehicles in select segments, there’s no more General in the Motors, but rather a more targeted approach to appeal to the well-heeled elites. While that will mean fewer overall sales, the goal here is to maximize the dollar amount of each transaction.
While it may be a smart move in the short run to take the profits in the hot selling full-size pickup and SUV market where its Chevrolet, GMC and Cadillac brands have a solid foothold, there’s stiffer competition in the high-end EV market from Tesla and new entries from established European rivals like Mercedes-Benz, BMW, Audi, along with start-ups like Rivian and Lucid.
There may come a time soon in which General Motors may have to reassess its approach and look at returning to some of the more affordable segments it has abandoned. The sad truth is that it may cost more to get back into the game than if they had stuck to Sloan’s original mission of offering a car for every purse and purpose and not just to those carrying a designer bag embossed with the Coach insignia.
In 1924, Alfred P. Sloan, the president of GM and architect of its divisional organization, famously said that GM offers “a car for every purse and purpose.” Its dominance in the U.S. market was so complete that the corporate motto in the late 1950s was “60 for 60” meaning it would capture 60 percent of the American market by 1960.
Today, GM’s share stands at just over 15 percent. Last year, for the first time in 90 years, it was surpassed in its home market as Toyota moved into the top slot with 2.3 million sales to GM’s 2.2 million. While being the sales leader comes with bragging rights, that honor alone doesn’t necessarily ensure profitability.
Rather than volume, auto makers are increasingly attuned to profit margins rather than looking to volume to deliver the profits needed to keep the lights on. GM took a big step in that direction by shedding divisions as early as 2002, when it closed Oldsmobile, even though that brand two years prior had celebrated its centenary. Arguably, it was the Curved Dash Olds that put America on wheels, predating the Ford Model T.
The 2008 government-managed bankruptcy saw GM shed Pontiac, its barely two-decade old Saturn division, and even newer Hummer operation. Globally, GM would eventually sell off Saab, Opel and Vauxhall and no longer manufacturer Holdens in Australia. Buick is being kept alive by dint of its popularity in China—it sells only four models in the US., all SUVs in the Encore, Encore GX, Envision (imported from China) and the Enclave. In China, it sells 27 models including the Verano, Regal and LaCrosse sedans it no longer sells here.
That paring back of the Buick lineup to just SUVs underscores the new focus of the modern-day GM. Its efforts are geared at the most profitable model lines, particularly SUVs and pickup trucks, while it abandons other segments, like traditional midsize and large sedans, compact hatchbacks and minivans. In addition to Buick dropping all sedans, Chevrolet no longer sells the Impala or Sonic, is dropping the Spark subcompact in August and sells the Malibu primarily as a fleet vehicle. The only traditional cars left in the lineup are performance models, the Camaro and Corvette.
Even its drive toward electrification is geared primarily at the upper segments. GM does offer the affordable hatchback Chevrolet Bolt and Bolt EUV crossover that starts just over $30,000. But its next generation electric platform using its Ultium batteries is coming to the market in the form of the GMC Hummer EV and SUV, Cadillac Lyriq SUV and Chevrolet Silverado. The GMC Hummer EV2 will be the base model when it hits the market later this year and will carry a sticker price of nearly $80,000. The range-topping models easily cost more than $100,000. The Lyriq will start at $60,000, and while the Chevy Silverado electric pickup will likely have a sub-$50,000 work truck version, most of the volume will probably be in higher and more expensive trims geared to the personal use market.
GM’s march upmarket away from volume segments can be seen in its average transaction prices. According to Kelley Blue Book, last month the average price for a GM vehicle was $52,206 nearly $6,000 more than the industry average of $46,404. American Honda, which still sells compact Civics, midsize Accords and the Odyssey minivan, vehicles that service a wider range of customers, clocked in with an average transaction price of just $35,509. Toyota, the new American sales king, is slightly higher at $39,718, but still well below industry average.
That’s not to say that GM is alone is cherry picking the categories in which it chooses to compete. Both Ford and Chrysler (the U.S. portion of the Stellantis group) have been cutting back on sedans and compact economy cars to focus more on SUVs and trucks. That too is reflected in their average transaction prices. Stellantis is higher than GM at $53,154, according to the Kelley Blue Book data, while Ford is lower at $50,675. Keep in mind that the Stellantis number also includes some high dollar European brands like Maserati and Alfa Romeo.
It’s left to primarily the Asian brands to serve the whole of the market. In addition to Honda and Toyota, brands like Nissan, Subaru, Hyundai and Kia continue to offer a wide range of vehicles geared towards the lower price segments. As a result, their overall share of the market has grown at the expense of former industry giants like GM.
This trend is likely to continue. With just four brands selling vehicles in select segments, there’s no more General in the Motors, but rather a more targeted approach to appeal to the well-heeled elites. While that will mean fewer overall sales, the goal here is to maximize the dollar amount of each transaction.
While it may be a smart move in the short run to take the profits in the hot selling full-size pickup and SUV market where its Chevrolet, GMC and Cadillac brands have a solid foothold, there’s stiffer competition in the high-end EV market from Tesla and new entries from established European rivals like Mercedes-Benz, BMW, Audi, along with start-ups like Rivian and Lucid.
There may come a time soon in which General Motors may have to reassess its approach and look at returning to some of the more affordable segments it has abandoned. The sad truth is that it may cost more to get back into the game than if they had stuck to Sloan’s original mission of offering a car for every purse and purpose and not just to those carrying a designer bag embossed with the Coach insignia.
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