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Published: Wednesday, 10/7/2009

GM loses market share; N. American sales chief leaves

ASSOCIATED PRESS

DETROIT — Less than a week after reporting a sharp drop in September sales, GM said its North American sales chief is leaving as the automaker struggles to prop up its falling share of the market.

General Motors Co. CEO Fritz Henderson announced the departure of Mark LaNeve on Wednesday during a conference call with media and investors. LaNeve, 50, is taking a job at a firm outside the auto industry effective Oct. 15, GM spokesman John McDonald said.

Although LaNeve's replacement has yet to be determined, his exit gives the company an opportunity to bring in fresh talent and a different view on sales, Henderson said. But that doesn't mean a successor automatically will be brought in from outside.

"We would benefit from fresh perspectives," he said.

GM's September U.S. sales plunged 45 percent, crashing after the government's Cash for Clunkers program wrapped up at the end of August. So far this year, its sales are down 36 percent.

GM's global market share stood at 11.9 percent in the third quarter, down from 12.4 percent in 2008, largely because of falling sales in the U.S. and Canada, Henderson said.

In the U.S., GM's control of the market fell to 19.5 percent in the third quarter from 22.1 percent in 2008. Other regions are performing better than expected.

LaNeve has told dealers that his departure was not a reflection of the company's product or marketing plans, McDonald said. He added that the consolidation and closing of dealerships had taken a toll on him. GM had 6,375 U.S. dealers at the end of 2008 and expects to have 5,600 by the end of this year.

LaNeve had been in charge of sales and marketing until July 10, the day GM emerged from bankruptcy protection, when Henderson took marketing away and put it in the hands of veteran executive Bob Lutz.

Lutz, who had served as head of product development and dropped plans to retire, had expressed disdain for GM's previous marketing efforts. Almost immediately, he ordered changes to ads to make them focus on vehicles and brands, comparing them with competitors in an effort to get customers to consider GM.

After Lutz was given the marketing job, he and LaNeve tussled over how to spend GM's marketing dollars, according to a person with knowledge of the situation. Lutz changed advertising agencies for the new "May the Best Car Win" ad campaign, which began Sept. 20.

Henderson said the company is paying far more attention to products and customer issues than it did six months ago, when it was consumed with restructuring.

GM's global market share rose slightly in the third quarter to 11.9 percent, up from 11.6 percent in the first half of the year. That's ahead of GM's expectations so far this year, Henderson said.

Henderson said GM will be relying on its Chevrolet brand to fill the void as the automaker winds down the Pontiac and Saturn brands.

"In terms of driving the share, it's got to be Chevrolet," he said.

Henderson also said GM will fall short of its employment reduction targets by the end of the year, but said he's confident it will end the year with a competitive cost structure.

The company wanted to have 40,000 U.S. hourly workers by the end of the year but instead will end with 49,000. Henderson said early retirement and buyout offers worked but fell short of the company's expectations.

GM had planned to employ 23,000 salaried workers by the end of the year but instead will have somewhere between 23,000 and 24,000, he said. That's because it has added some employees in technology and financial areas, and it decided to keep its AC Delco parts operation rather than sell it, resulting in more workers being retained, Henderson said.

After the conference call, Henderson told the CNBC cable network that the company is not breaking even at present but is moving in that direction. He also said it would be ready to make a public stock offering by the second half of next year.



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