GM's Alliance With Lyft Adds to Distribution, Could Bolster Market Share
General Motors' (GM) - Get Report budding alliance with Lyft could hasten the day when selling rides is as big or bigger a business than the selling of vehicles. Meanwhile, the pact in the near-term could help lift GM's market share in the U.S.
The financial impact of Lyft and other recent GM investments related to advanced mobility soon will become clearer as the No. 1 U.S. automaker discloses more specific metrics about the pact, including how many vehicles are leased to Lyft drivers and at what prices.
GM hasn't said it will address the topic specifically on Thursday when it releases second-quarter earnings. Analysts may coax out some of the numbers in the question-and-answer period with GM executives that follows the release.
Last Monday, Lyft and GM said they were expanding the availability of GM cars to Lyft drivers beyond the initial locations in Chicago, Boston, Washington, D.C. and Baltimore; California and Colorado will be added this fall. The companies call the program, in which GM owns cars that it leases to Lyft drivers, "Express Drive."
The chief executives of both companies declined anew this week to provide specifics about the number of vehicles involved. Dan Ammann, GM president, told Reuters that the numbers are "meaningful and are going to be very meaningful."
Through the first six months of the year, Ford (F) - Get Report , the No. 2 automaker in the U.S., has edged closer to GM in terms of total market share, which GM credits to its deliberate effort to sell fewer vehicles at low profit to daily-rental fleets such as Hertz. Hanging on to No. 1 status remains a goal for GM, one that could be made easier if Lyft fulfills Ammann's forecast for "very meaningful" numbers. The strategy of reducing lower-profit sales has been a hallmark of Mary Barra's 30-month tenure as GM's CEO.
GM in January announced that it was investing $500 million in Lyft, taking a stake of about 9% in the ride-hailing enterprise that is a distant second to Uber, which operates similarly. GM is believed to have invested $1 billion to buy Cruise Automation, a Silicon Valley maker of software used for autonomous driving. The specific terms of the Cruise purchase could be disclosed Thursday.
In May, Toyota (TM) - Get Report announced a strategic investment in Uber that included an agreement to lease Toyota vehicles to Uber drivers. The Japanese automaker, No. 1 globally, said it was interested in exploring ride-sharing opportunities with Uber. The investment reportedly was described as "small."
The six-month sales totals in the U.S. through June showed Ford with sales of 1,345,170 vehicles, up 4.4% from a year ago, and GM with sales of 1,438,915, down about 4.4%, during the same period of 2015. GM's U.S. market share fell to 16.3% while Ford's rose to 15.3% -- a mere one point share difference.
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.