• Oct 12, 2009
General Motors has announced its planned production for next year: 2.8 million vehicles. That's a 45% increase over its production this year – 1.9 million cars and trucks – and according to some analysts, it's completely unwarranted. GM says it arrived at that number based on "real simple math." Analysts quoted in the Detroit Free Press today appear believe that GM was guided more by hope and a quest for market share.

Just about everyone agrees that next year's new car market will grow compared to this year, with estimates generally ranging from a 10 increase in sales. GM slashed its production this year so much that by September, its inventory hit unprecedented lows. To be ready for what it believes will be a 15 this yea)r, and to have enough inventory on hand, it figures it needs to bump production by 45%.

Every analyst appears to agree that GM will need to make more cars. But 2.8 million? Even as one analyst said, "There is no question that their production is going to be up next year and it's going to be significant – it really is," they were all in agreement that 2.8 million vehicles will leave a lot of cars either sitting on lots or being ridiculously discounted. The announcement has brought out sentiments that we are seeing shades of the old GM with a 'make them and move them by any means necessary' mentality. Both GM and the analysts' math is "real simple," but we'll have to wait until next year to see whose is accurate.

UPDATE: GM has responded to the original article on its Fastlane blog, chiding the Detroit Free Press for questioning a number that GM only meant as a 2010 production possibility, not a certainty.

[Source: Detroit Free Press | Image: Chung Sung-Jun/Getty]


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  • 41 Comments
      • 5 Years Ago
      Help me understand something, are they predicting a market gain of 15% or a GM gain of 15%. You gotta think that the competition isn't going to sit still.

      Even if they don't go up to 2.8, at least I feel more confident that my Honda resale value will be better.
      • 5 Years Ago
      So, first the analysts say that 2.8M vehicles is too many for GM to build for next years North American market. Then the analysts say that next years North American market should be 13.6M or higher.

      hmmmmmmm . . .

      13.6M divided by GM's 21% market share is . . . . .2.856M.

      I guess the analysts aren't using calculators these days.

      GO GM. Love your new launches.
        • 5 Years Ago
        The thing is that many analysts think both GM and Chrysler don't have the product to support their current market share.
      • 5 Years Ago
      What the media fails to understand is, You can't sell the damn cars if you don't have them. The GM lots are empty, as empty as the medias hollow heads.
        • 5 Years Ago
        You are right, but GM has picked up production, and dealer inventory is already improving somewhat. The low dealer levels have certainly contributed to keeping GM market share a little lower. I can't wait until next year. The Lambda Crossovers hold a 50% market share now, the Malibu and CTS increased their market share when they launched, and the 2010 Equinox has more than doubled its market share, and there aren't that many to sell, as you say. The Terrain, LaCrosse, and SRX are already showing doing the same . Next year the Cruze, the Volt, and I think the full size trucks, then an expansion of Buicks line. I think its all a very good sign, as long as U.S. sales slowly recover over the next few years.
        • 5 Years Ago
        And what the economists, and others fail to realize is... regardless of sparse or flush inventory, you can't sell cars to people who can't really afford them, and are otherwise battening down the hatches, economically.
      • 5 Years Ago
      I wonder what the next Chapter will be for GM?
        • 5 Years Ago
        GM also responded in its FastLane blog that the comment was misinterpreted--that they indicated that they *could* build up to 2.8 million vehicles next year, not that they necessarily planned to.

        Hopefully that's true. GM's sales, along with everyone else's, will be on the rise over the next year, but they need to be realistic about their hit-and-miss product portfolio and tarnished image.

        The post yesterday about Chevy "aiming for 70%" of total GM sales had me worried. If Chevy's VP is still thinking about competing with other divisions, instead of competing with *the competition,* there's still a lot of culture change to do.
        • 5 Years Ago
        11
      • 5 Years Ago
      The 2010 Chevy Equinox has already increased sales to overcome the loss of Saab, Hummer , and Saturn combined. The GMC Terrain, still not in every dealership has made up over 65% of the Pontiac Torrents sales already. The Buick LaCrosse and Cadillac SRX will increase GM market share enough to almost take out the rest of Pontiac's sales, and the Chevy Cruze will dramatically increase GM's share in the compact family sedan segment.

      I don't see much of a decline happening to GM's market share, and with the quality and style of the launches over the last few years, I think GM will actually begin to build a little market share, even with just their 4 core brands(which were already 92% of sales in September.

      Remeber, their share would be 23% today, had they not lost a ton of fleet sales while their plants were closed.
      • 5 Years Ago
      *facepalm*

      Really? REALLY GM?!
        • 5 Years Ago
        Ya, but who says they need to get back to those levels?
        • 5 Years Ago
        One thing Autoblog fails to mention is that GM's current inventory is a whopping half a million vehicles fewer than they started the year with. That means GM didn't have to produce as much this year because they had a million cars sitting on the lots to sell. That isn't the case anymore.

        It seems like a shocking number at first, but when you really crunch the numbers it doesn't seem too unreasonable. those 500,000 fewer vehicles in inventory accounts for over half of the production increase.
        • 5 Years Ago
        hey, if you are the union and you own 40% of government motors, what good is it if you cant increase production and put more of your cronies back to work and increase union power again.

        i guarantee those addtional line jobs wont be temps, contracts, or other non-union roles.
        • 5 Years Ago
        ack,

        No, not really. POSSIBLY. Read their FastLane blog follow-up.

        Makes much more sense at that point.
      • 5 Years Ago
      Go visit a GM dealer in your area and look at the cars they have on the lot. Chances are, they don't have very many vehicles in stock. IMHO, GM cut too far back on production and it really hurt their sales when the C4C came along....and they still have 0% financing deals out there but no cars that people actually want to buy....ie...sold out.

      My mom was recently looking for a car recently and there were no Cobalt's or HHR's with trim level she wanted within 60 miles...and this is in South Florida where there are around 20-30 Chevy dealers.

      She settled with a Cobalt 1LT that had to be retrieved from a dealership an hour north.
      • 5 Years Ago
      I'll be buying a new "Toyota Pearl Harbor" or maybe a "Honda Battan Death March". Don't care too much for those Nisson "Wake Islands".
      • 5 Years Ago
      GM bashing by the media never seems to slow down.
      • 5 Years Ago
      From GM Itself: Read the facts people, don't jump to conclusions on data you DON'T have, and DIDN'T collect.

      "Let’s cut to the quick. We predict (as does almost everyone else) that the industry will be up around 10-15 percent next year (some predict more). GM’s year-over production increase of “45 percent” is not a story. The increase reflects a dramatically lower production for this year based on the fact we cleared almost 500,000 of inventory…the baselines are not reasonable to shape the intended story. GM had indicated in a media call that it could produce upwards of 2.8 million units in North America — this is a number we COULD do…it’s not the number we necessarily WILL do. We only plan and report production estimates by quarter to reflect the current economic climate."
        • 5 Years Ago
        Oh come now, NT, don't try to bring factual details into this. People want to foam at the mouth about "Government Motors", union power, and other such reductionism. These aren't the sort of people who are going to change their mind because the original article was worded badly and that the 2.8 million number represents an absolute maximum of production capacity, not the number of cars they'll actually build.
        • 5 Years Ago
        With what money is the population going to start buying 10-15% more NEW cars that depreciate right off the lot...

        The fundamentals of the economy show no signs of recovery. Job losses continue, under-employment is rampant, and not reported on.

        The only time unemployment stats rise are when people fall off the end of their benefits, and stop claiming, because the number of jobs is not on the increase, but going the other way.

        Wages for those of us still employed have been stagnant. Some of us for quite some time.

        Inflation rose far more last year than was reported. The reported stats IGNORED the cost of food and fuel, the two largest, LEAST ELASTIC expenses in most family budgets, and the ones that saw the largest price increases.

        Some deflationary pressure was brought to bear in the form of less demand due to high prices, and cutting back, to keep some price control in place, but over-all the US dollar has deflated more than 20% in the last few years.

        So fewer people working, more people working for lower paying employers, those who kept their jobs working for the same or less money, and that money going less far in the marketplace, and people's savings, investments, and equity being demolished in the last two years.

        What exactly about that is supposed to inspire people to buy new cars en masse?

        The Dollar is further weakening under INSANELY STUPID GOVERNMENT MONETARY POLICY, and higher taxes, higher costs, and now starting to pass tariffs against our creditor, China, and the Dollar being discussed to be un-pegged as the international trading currency for oil and other things...

        This market is not going to get better, it is going to get WORSE. Until the middle working class and entrepreneurs are un-shackled from future debt, and are allowed to pull this economy out of the crapper that the government has put us in, get ready to reap their whirlwind.
        • 5 Years Ago
        I'm gonna have to agree with Boxer here.

        We're entering a post-consumer society; slowly, and with many fits. Nevertheless middle class real wages are down, and low APR credit is alot harder to come by. With many of GM's products aimed at middle Americans its going to be interesting to watch how sales pan out over the next year.

        I'm definitely in the camp that hasn't seen a wage increase in some time, I had to leave two different companies over the past 4 years to see any valuable increase in my income. One company has since folded completely, the other hasn't given out a bonus since 2006 and has frozen salary increases for the past 2 years.

        Without a raise this year I couldn't imagine buying a new car right now, let alone getting a deal on that used 09 wrx (or 08 STI) I've been eying for some time...
      • 5 Years Ago
      Gov't Motors is just plain STUPID and with our money... pisses me off!

      Just run the numbers - if 2010 is up 15% to maybe 11.5-12 Million units and GM maintains their 18% marketshare (after shedding Saturn, Pontiac, Hummer and Saab), then they should sell 2.07 - 2.16 Million vehicles (avg.2.1 million) means they will OVER produce by 33% and have 700,000 vehicles in inventory at a daily sales rate of 6800 would give them a whopping (103) days of inventory... STUPID!!!!!!!!!!
        • 5 Years Ago
        What a lot of people are missing is that the production numbers are North America, which includes nearly a half million vehicles for Canada and Mexico, plus some net exports. A lot of people are comparing those to U.S. sales. Easy mistake, but still a mistake.

        If you do the numbers right, they actually make sense. Forget two of the three countries in North America, and the don't.

        Tom Wilkinson at GM
        • 5 Years Ago
        It was never "our" money.
        • 5 Years Ago
        Greg,

        Now add the market share they have in Canada and Mexico, to which they export. You'll get a lot closer to 2.8M then.

        Also, as the FastLane blog said, they said that they COULD hit 2.8M, not that they WILL, and that they will be aggressively adjusting production levels on a quarterly basis to control supply and inventory.

        Helps if you read the article and think before you react...
      • 5 Years Ago
      I am sure the car market will grow in the next year. I'm not so sure it will much for GM though. I'm sure it will fall short of their ... expectations.

      Many of us are not fooled into thinking that there's really anything "new" about the "New GM".

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