In this chapter, the paper will analyze the companies with the highest three market shares in America – General Motors (GM) at 17%, Ford at 15%, and Toyota at 14% in 2016 (American Customer Satisfaction Index – ACSI, 2016). Furthermore, GM and Ford are the two biggest players in ‘big three’ and Toyota is largest (international and Japanese) player in USA.
After providing an history and current overview of each company, this chapter will conduct an internal analysis of each company and a cross-company analysis thereafter. For these analysis, tools such as the SWOT (strengths, weakness, opportunities, and threats) will be used. Furthermore, the paper will evaluate the OEMs’ core resources and capabilities using the VRIO framework.
Supporting data is present in the appendix.
Company A – General Motors (GM)
GM, or General Motors Company, was founded as a holding in 1908 by William C. Durant in Michigan. The company is currently the largest amongst the ‘big three’ and was the largest auto maker from 1931 to 2007. In 1921 GM had 12% U.S market share and had just initiated its plan to targeting its five brands – Chevrolet, Buick, Pontiac, Cadillac, and Oldsmobile at different groups of buyers. After World War 2, GM’s marketing in U.S was targeted to the young and jovial middle class. GM convinced them to purchase a new car every year, as a sign of American success. This led to GM, along with its subsidiaries, accounting for 54% market share in 1954. By 1979 GM becomes the largest private employer in USA with nearly 620,000 employees. However, the Arab oil embargo and the rise of overseas automakers, hurts GM’s sales in 1980, with annual loses of US $ 750 million or US $ 2.3 billion in todays’ money. Thereafter, GM consolidated its truck and car operations and began a concept of ‘badging’ – where GM placed different badges on essentially the same car – i.e. GM shared parts in-house. After observing the Japanese concept of Kaizen, GM adopted the same in early 1990s, which did lead to an increase in US sales, however, the Asian markets were experiencing a financial crisis during the same time (Encyclopedia Britannica, 2017).
Today GM sells four primary brands in North America – Buick, Cadillac, Chevrolet and GMC. Outside of North America GM sells seven primary brand – Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall. It also has equity stakes in other Asian joint-ventures. GM reports its data in two main areas – Automotive (which includes four geography based divisions and a corporate division) and GM Financial. The Automotive area focuses on the production, assembly, promotion and retail of motor vehicles. GM Financial focuses on providing credit and financing options to customers. (GM – History & Heritage, 2017)
North America and the USA are the biggest markets for GM globally. North America accounts for 75% of GM’s global automotive revenues at US $ 119 billion and 63% of the wholesale units at 3.96 million in 2016 (exhibit 5). The wholesale units have been growing in North America by 4% annually for last three years. GM Financials revenues have been increasing 30% annually for the last three years. (GM Annual Report, 2014, 2015, 2016).
Exhibit 5: GM: Revenues in billion U.S. dollars in 2016 (GM Annual Report, 2016)
GM’s four primary US brands 2016 sales share is (JATO, 2017) –
Chevrolet – 68%
GMC – 19%
Buick – 7%
Cadillac – 6%