This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GM's Market Share Hits 90-Year Low, So Why All the Optimism?

By Phil LeBeau, CNBC Correspondent

NEW YORK ( CNBC) --When you see the following stat, what's your reaction?

GM's (GM) share of the U.S. market in the first quarter was 17.5%, its lowest level since 1922.

Does that make you think the world's largest auto maker is just slipping again? Or do you shrug your shoulders and say, "OK, but the company is more profitable than ever before, so I can live with smaller share"?

More from CNBC
Will Cruze, Wrangler Fire Investigations Burn GM and Chrysler?
Sales Surge as Annie Gets Her Gun
In the 'Cockpit' of the F-35 Joint Strike Fighter

Morgan Stanley analysts Adam Jonas, Ravi Shanker, and Yejay Ying are in the group that's not worried. In their opinion GM's smaller share is not a concern for four reasons:

  1. Pricing is strong with average transaction prices up 3.4% to a record high.
  2. GM will be refreshing 80% of its U.S. line-up by 2014 - more than any other auto maker.
  3. GM's retail sales (much more profitable and important) are outpacing fleet sales.
  4. GM sales in the hottest auto segments (crossover, small car) are at multi-year highs.

Bottom line: Morgan Stanley (MS) likes the way GM is transitioning towards becoming an auto maker focused on growing profits instead of just scrambling to hang on to market share for the sake of having market share.

Doe any of this matter to car buyers or investors? So far it hasn't resonated, despite GM posting record profits last year.

The extremists will never change their opinions of GM. There will always be fans of the auto maker who overreact at the slightest negative headline. Just as there will be GM bashers who refuse to see any of the positive steps the company has taken since leaving bankruptcy. I know because I hear from both sides every day, and their e-mails completely skewing the news of the day provide a good chuckle.

But as we go through the rest of this year, it will be interesting to see how investors react if GM's market share continues to shrink. Even more interesting will be watching the stock price if GM continues to grow the bottom line. In theory, the stock should move higher. But as we've come to learn about the new GM, nothing about the market's reaction to this stock is normal.

--Written by Phil LeBeau at CNBC
CNBC is a world leader in business news, providing real-time financial market coverage and business information.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.01 0.00%
FB $99.51 -0.24%
GOOG $677.65 -0.75%
TSLA $147.00 -0.67%
YHOO $26.82 -0.85%


Chart of I:DJI
DOW 16,014.38 -12.67 -0.08%
S&P 500 1,852.21 -1.23 -0.07%
NASDAQ 4,268.7630 -14.99 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs