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General Motors plays the blame game

Detroit, Oct. 22: Despite a relentless campaign of incentives like interest-free loans with no money down, General Motors officials expressed doubts Monday about achieving their goal of capturing 29 per cent of the US market for new cars this year. They blamed Korean and Japanese auto companies, saying they have gained an unfair advantage through devalued currencies and marketing actions.

In recent months, GM executives have been wearing pins with the numeral 29 as a reminder of the market share target, which GM last achieved in 1999. The company has repeatedly emphasised the popularity of its lineup of sport utility vehicles and insisted that it has gained market momentum.

However, through September, GM held 28.2 per cent of car and light truck sales in the United States, up about 0.1 percentage point from 2001, according to figures from Autodata Inc., an industry forecasting firm based in Woodcliff Lake, N.J. Autodata’s numbers do not include Saab, the Swedish luxury carmaker that GM acquired in 2000.

In apparently the first indication that GM might fall short, William J. Lovejoy, the company’s group vice-president of sales service and marketing, said during a conference call with journalists on Monday that the goal was ambitious. “I'm not going to make a prediction, but 29 is a stretch for us to get to,” Lovejoy said. He went on, “If the competition would just play a little fairer, we could do it.”

(GM announced Monday that Lovejoy, 62, will retire on December 31. He will be succeeded by John F. Smith, 51, vice-president of GM’s field service, sales and parts operations. Smith is no relation to GM’s chairman, John F. Smith Jr.)

GM’s biggest problem is competition from Korean manufacturers, particularly the largest player, the Hyundai Motor Corp., Lovejoy contended. Hyundai offers customers a 10-year, 100,000-mile warranty, and its lineup includes some of the lowest priced vehicles in their categories.

Such a combination is “difficult for us to match,” said Lovejoy. “It’s one of the reasons they came out of nowhere to pick up three, four points of share.”

He added that he thinks all of Detroit is at a disadvantage because of the weak value of the Korean won and the Japanese yen versus the dollar. He said that currency exchange rates give the Asian manufacturers a cost advantage of $ 3,000 to $ 3,500 per vehicle over American manufacturers, though he did not single out specific vehicles or companies. Wall Street analysts previously have estimated the advantage at closer to $ 2,000 per vehicle.

Finbarr O’Neill, the chief executive of Hyundai Motor America, said he was surprised that the world’s largest automaker was concerned about his company. “I would think that General Motors would have more to worry about than Hyundai,” he said.

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