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GM's Ailing Sales Put Exclamation Point on Bailout Plea

General Motors Corp. suffered a 41.3% drop in November sales, further demonstrating the auto maker's perilous situation as it pleas for a federal loan to survive the current economic downturn. An instant replay of October, with the exception we're a little bit better and the industry is a little bit worse, Mark LaNeve, vice president-sales, service and marketing at GM North America, says of November's

General Motors Corp. suffered a 41.3% drop in November sales, further demonstrating the auto maker's perilous situation as it pleas for a federal loan to survive the current economic downturn.

“An instant replay of October, with the exception we're a little bit better and the industry is a little bit worse,” Mark LaNeve, vice president-sales, service and marketing at GM North America, says of November's results.

GM delivered 153,453 vehicles in the month, compared with 261,396 year-ago, according to Ward's data, for an estimated 21% of the U.S. market. Through October, the auto maker's deliveries were down 21.9%, compared with like-2007.

GM's November plunged an industry-worst 47% to 168,000 units. October's seasonally adjusted sales rate of 10.5 million vehicles, plus November's 10.9 million, underscores the industry's appeal for a $25 billion industry bailout.

“It's a terrifically difficult industry we're suffering through right now,” LaNeve says in his monthly sales call with journalists and Wall Street analysts in December. “I've been in this (business) 28 years, (and) I've never seen anything remotely close to this for the industry. It's breathtaking to look at the numbers up and down the line for us and our competitors.”

In June 2005, shortly after LaNeve took over sales and marketing at GM, the auto maker conducted an inventory-clearing employee-pricing program that sold 475,000 retail units. In a bleak comparison, he says GM delivered that many retail units in the 4-month, August-November timeframe this year.

“And I'm gonna tell you folks, we've got much better product right now in every single category than we did in June 2005,” LaNeve says. “That's how severe the economic conditions are.”

Coinciding with the recovery plan GM is presenting to Congress that calls for deep cost-cutting and a strategic review of the Saab and Saturn brands, LaNeve says the auto maker also intends to continue its present marketing plan; invest further in advanced-propulsion technology, such as the Chevrolet Volt extended-range electrical vehicle due in 2010 and strive to keep its dealers profitable.

“We're going to continue massive cost-cutting and continue leaning out the corporation to a much more flexible, fast-moving company of the future,” he says. “In the meantime, we need to sell (vehicles) and maximize our cash.”

To accomplish this, LaNeve says GM will sweeten its current annual “Red Tag” sale with “unbelievable offers.” It also will launch a new ad campaign for the program highlighting quality, fuel economy, value and performance advantages that have been masked by rumors of GM's failing viability.

LaNeve says his group is not planning an alternative marketing strategy should GM be turned down for the federal loans and face Chapter 11 reorganization.

Marketing research groups estimate GM lost 25% to 30% of potential sales in November due to headlines speculating on bankruptcy. Earlier this month, CNW Research said an analysis of new-car buyers showed 80% would avoid purchasing a vehicle from a bankrupt auto maker.

LaNeve says determining sales losses in November due to negative news about GM is “extremely difficult to quantify,” but adds there's “not a doubt in my mind it is affecting our business. With the products we have in the market right now, we would hope to be gaining share.”

LaNeve suggests GM's November's sales losses due to negative news could be higher than 30%.

“Having lived out there, it's very easy for competitive dealerships to sell against us when we're getting cross-shopped,” he says: ‘You don't want to buy that GM product or that Ford product, because your warranty won't be any good.’ That's going on. The sooner we get this (bailout) behind us, the better for our company and our industry.”

Mike DiGiovanni, GM's chief sales analyst, says recent efforts by the U.S. Treasury and Federal Reserve modestly have thawed the frozen credit market, while sharply declining pump prices have put about $200 a month back in consumers' households. But while the economy sits in a textbook recession, the auto industry currently suffers through a depression-like downturn.

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