In a Financial Times Article GM and Ford suffer new sales setback in the US (subscription required), Bernard Simon writes the following.
Paul Ballew, GM's sales analyst, put down November's "very weak" results mainly to consumer fatigue after a surge in sales last summer spurred by an `employee discount for everyone' scheme. Both GM and Ford expect an improvement in December.
Several Asian and European carmakers posted sizeable sales increases last month. Toyota's sales grew 10 per cent from a year earlier. Honda set a November record. Toyota's performance was boosted by a 34 per cent increase in sales of its Prius petrol-electric hybrid sedan.
"The holiday buying season is off to an encouraging start," said Jim Press, head of Toyota's North American unit.
Those are the problems with incentive programs: the programs reduce the selling price per vehicle and hence profit per vehicle, and the programs from steal future sales, making future sales that much more difficult.
I find it interesting that Kirk Kerkorian has remained relatively quiet recently. Perhaps there are not a lot of options to pursue. In any event, GM remains in a difficult position.
Disclosure: I remain short GM shares.
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