GM Loses First-Place after 2008 Results

By Brendan Moore

01.21.2009

It finally happened.

GM lost their first-place position in sales to Toyota in 2008. Toyota and GM had been running neck and neck in global sales the previous couple of years to 2008, and since Toyota worldwide sales dropped 4% in 2008, and GM worldwide sales dropped approximately 11%, that difference was enough to put Toyota on top.

GM was the sales leader for 77 consecutive years.

But, GM says it’s not that big a deal in contrast to their other problems. In fact, in an unusually blunt statement, Fritz Henderson, the COO of GM, said yesterday, “They passed us in market cap, profitability and cash flow a long time ago”.

GM actually did fairly well in most of the world last year, but the staggering 22.7% drop in sales in North America to 3.6 million vehicles sealed GM’s drop to second-place.

GM put 8.36 million vehicles across the curb last year, putting GM about 616,000 units behind the 8.97 million reported by Toyota yesterday.

The cynical reader might scoff at the notion that GM isn’t heartbroken over losing their sales crown, but I think that notion is probably pretty accurate. In a series of interviews I conducted with half a dozen senior GM executives during the recent Detroit Auto Show, it was obvious that GM was a lot more concerned about surviving first and thriving later.

I would characterize the prevailing mode of thought at GM as a crisis situation where everyone is doing whatever they can to ensure the company lives another day so they can fight the good fight many days in the future. Note that I wrote “crisis”, not “chaos”. What emerged during those interviews was that everyone at GM is pulling awfully hard in the same direction, and it is an extremely disciplined effort.

In fact, it was obvious that that all the executives had gotten the same emails and attended the same meetings regarding public statements. I got the same scripted answers (almost word-for-word on occasion) from all of them regarding new product, company morale, bailout money, etc. The interviews were not very satisfying in terms of learning anything new, but it is obvious that GM is intent on reducing missteps in terms of media coverage now and in the future. There is an internal belief at General Motors that there is much more positive news about the company and its products than what gets reported in the media and GM wants to change that going forward.

Toyota, for its part, is sanguine about their new Number 1 position in sales. They acknowledge it, welcome it in very low-key way and make clucking noises about how its not that important, really.

But you know they’re happy about it, even if they’re not high-fiving each other in public. Their corporate ambition is to be Number 1 among auto manufacturers, and now they’ve got another notch on their corporate belt that says that they have achieved their goal.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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