Key investor risk: Is General Motors (GM) losing share?
As we saw in the previous parts of this series, GM is among the top three global automobile manufacturers. It also relies on its global volume to achieve adequate investment returns on its factories. However, GM has been losing share for decades.
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There’s a lot of information on the table above, but I’d like to draw your attention to the “Total Worldwide market share number,” which was 11.8% in 2011 and 11.5% in 2013. Looking at the math, a 0.1% global market share change is approximately 76,000 vehicles, or a 0.8% change to GM’s annual sales number of 9.7 million vehicles per year.
I took a look at GM’s 2000 annual filing, and GM had a 15% global market share. Each point lost means fewer vehicles to absorb costs. Put differently, if GM maintained its 15% market share, it would have sold 11.4 million vehicles in 2013. Assuming $23,000 per vehicle sale, the company would have added nearly $40 billion revenue and, assuming an 8.8% EBITDA margin, it would have added $3 billion to GM’s annual free cash flow.
So, management is focused on market share. It’s an important number to watch in GM’s quarterly call. As we pointed out earlier in this series, GM has significant share in the largest markets. GM’s recent introduction of new SUV models in the U.S. and new Opel models in Europe should support GM’s gaining market share in 2014. Toyota (TM), Volkswagen (VOW), and BMW Group (BMW) have gained share, while Ford (F) has lost share. An alternative would be to invest in the industry through buying the industry ETF, CARZ.