GM’s Sales Surge Lifts Market Share

Aided by costly incentives and an advertising blitz, General Motors Corp. reported strong March vehicle sales Friday that helped boost its sagging market share to more respectable levels.

GM’s sales jumped 3.8% last month on the strength of record sales of minivans, pickup trucks and sport-utility vehicles. The company accounted for 32.5% of industry sales, rebounding from just 28.6% in February.

“The report of our demise is greatly overstated,” said Ronald Zarrella, GM’s marketing chief.

GM’s sales performance was being closely watched because the nation’s No. 1 auto maker had seen its market share slip perilously below the 30% level in February.

Increasingly, questions were being raised about whether GM’s 5-year-old restructuring was faltering.

The company, which once controlled nearly half the U.S. market, is clearly more financially sound than it was five years ago. But profit has not translated into a stronger market position.

Overall, the nation’s auto sales fell 2.8% in March, compared with the same strong period a year ago. GM was the only domestic auto maker to report increased sales last month. Ford’s sales in March were down 2.6% and Chrysler’s down 1.9%.

Among the major Japanese manufacturers, only Honda showed improvement, with sales up 5%. Toyota’s sales were down 13%, and Nissan’s dipped 38%.

European auto makers continued to make inroads. Mercedes-Benz was the standout, with a U.S. sales increase of 69% largely because of sales of its ML320 sport-utility vehicle.

Auto sales, an important measure of economic strength, are running at a seasonably adjusted annual rate of 15.2 million vehicles, a healthy level in line with annual sales for the last three years.

Despite the good sales, competition is becoming intense and auto makers are having to offer rebates, cut-rate loans and other incentives to attract customers. Such enticements cut into profits.

“It seems to me you have to offer more and more and run faster and faster just to stay in place,” said David Healy, an analyst with Burnham Securities. “This is especially true with passenger cars.”

Truck sales continue to outpace car sales. GM, for instance, reported an 11% increase in truck sales but a 2% decline in car sales. Both Chrysler and Ford sold more trucks than cars as more buyers substitute well-appointed sport-utilities for traditional sedans.

Ford’s sales drop was in line with expectations and partly reflected its decision last year to discontinue five poor-selling car lines. Not counting those vehicles, Ford’s car and truck sales increased nearly 2% in March.

GM management promised last year that market share would rebound to 33% on the strength of 16 new models.

Instead, its share languished at 31% because of labor strife and slow vehicle launches. This year, GM officials aren’t making market-share predictions.

Critics say GM has been slow to respond to aggressive pricing by competitors, misread the market shift to trucks and has too many divisions selling overlapping, unexciting models.

“They are always late to the party and there’s nothing innovative in the product line,” said Maryann Keller, analyst for Furman Selz.

GM recently moved to increase TV advertising, add incentives to many of its vehicles and offer discounts to dealer employees.

“We will see if they can pull another rabbit out of the hat in April,” Healy said.