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GM will stick with US strategy, even if market share falls

By Greg Gardner/Detroit Free Press (TNS) • Jun 9, 2016 at 2:00 PM

DETROIT — General Motors will continue to emphasize the profitability of each vehicle sold in the U.S. even if doing so results in declining sales and a lower overall market share, CEO Mary Barra said Tuesday before meeting with shareholders.

This year, GM has worked to reduce sales to daily rental companies because such sales aren’t as profitable as retail sales directly to consumers at dealerships. That strategy, however, has resulted in several consecutive months of sales declines.

Through May, GM’s share of the U.S. new vehicle market had dropped from 17.7 percent to 16.6 percent, the lowest it has been since World War II.

“We have the most significant increase in retail market share growth and we aren’t changing from that strategy,” Barra said, separating retail sales figures from overall numbers. “Not only does it strengthen residual (resale) values but it also will position us well if and when the cycle turns.”

Shares of GM stock inched up 0.8 percent, or 24 cents, in trading Tuesday, closing at $30.23.

GM is about halfway through a $9 billion stock repurchase plan, remains on track to make its first profit in Europe since 1999 and is reporting increased sales in China after a period of uncertainty there.

The U.S. auto industry is on track to break last year’s sales record of 17.5 million.

But investors remain skeptical that sales, especially in North America, are at a peak and will begin to fall over the next few years.

GM also has made large investments in new mobility, first by buying a 9 percent stake in ride-hailing service Lyft in January. Then it acquired Cruise Automation, a 3-year-old San Francisco startup that has developed a product that can enable a car to control acceleration, braking and steering autonomously.

Multiple media reports said GM paid $1 billion for Cruise.

As automakers and technology partners push to give vehicles increasing capability to drive themselves, there is a debate about how far the concept should be allowed to go.

Google, for example, is aiming to achieve what government regulators call “level 4” autonomy, which could allow a manufacturer to take away certain modes of human control, even the possibility of removing the steering wheel and pedals.

Asked whether GM is ready to go that far, Barra was careful.

“It is very important that we demonstrate safety,” Barra said. “Having that capability with the steering wheel and the pedals still in the vehicle is good way to demonstrate safety. We want to lead in autonomous, but we want to do it safely.”

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