GM Ends The Year As The Leading Vehicle Seller In The U.S.

-8.32%
Downside
45.35
Market
41.57
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GM: General Motors logo
GM
General Motors

General Motors (NYSE:GM) reported a year of record profitability in 2016 on the back of extremely strong pick-up truck sales. As Ford scaled back the production of its best selling F-series pick-up trucks to allow its factories to be retooled, GM gained market share with Chevy Silverado and GMC Sierra together outselling F-150. This year sales of F-150 are back up and both of GM’s trucks have seen their annual sales decline, with Silverado declining 4.3% and GMC Sierra declining 1.1%. Despite this, GM gained in market share in the U.S. in December In fact, the Detroit auto maker ended 2016 with a market share of 18.9%, 160 basis points higher than in 2015. Toyota edged out Ford in second place, growing its market share by 30 basis points to 14.4% while Ford saw its market share decline by 80 basis points to 14%.

us market share

However, there is a very important caveat here. Profits in the auto industry do not dovetail neatly with the number of units sold. This can be seen very evidently in the fact that even though GM and Volkswagen sell nearly the same number of units as Toyota, there combined market value isn’t even close to Toyota’s market cap alone. This is because it is much more profitable to sell cars in some segments than in others. For example, even though Ford saw its market share decline in 2016, it should post higher profits because transaction prices for its new aluminum bodied pick-up trucks, especially the Super Duty stylings, have been much higher, some almost as much as 10% or $ 5,000 higher, than in 2015. This should mean much higher profitability for the company.

gm 2016 numbers

GM on the other hand has had a mixed year. Consider the list of its ten highest selling cars in 2016. Seven of these ten models saw their sales decline in 2016, with sales of three declining in double digit rates. In contrast, the three models that saw their sales increase did so in high double digit rates. In fact, GM’s overall increase in market share might partly be an outcome of the increased number of models they have present in all segments. This makes the company less vulnerable to trends affecting the passenger car segment especially as their sales mix is geared more towards the heavier vehicles. This should mean that the historically high sales levels translate into extremely high profits, even though they may suffer by comparison to some of last year’s numbers.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for General Motors

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