GM (NYSE: GM) was supposed to be one of the largest beneficiaries of the recovery of the US car market. It had been through a bankruptcy with federal government aid which helped it substantially improve its balance sheet, and therefore, the financing of future initiatives. Arch rival Toyota’s (NYSE: TM) prospects were hurt by a series of crippling recalls. Chrysler was too small to launch a full line of vehicles to replace its aging fleet. GM got further leverage still in its home market when the Japanese earthquake slowed production of vehicles made by Nissan, Toyota. and Honda (NYSE: HMC).

GM’s revival has flagged and its stock price has dropped to the lowest level since it went public.  Currently, it is down 25% this year. Toyota’s shares are up slightly over the same period.

Research firm Truecar expects GM’s market share to fall to 20.4% in July from 20.5% in June. If there ever was a time for GM to gain, it is now. But, that has not happened. Chrysler’s sales have unexpectedly risen, and the No.3 US car company is expected to show it had 10.4% of the market last month. Ford’s market share has been 17% to 18% this year. Hyundai’s sales have moved so high, so quickly, that it probably had 10.4%  of the market last month. The Korean car company’s sales in America were a footnote three years ago.

Toyota and Honda are likely to begin to gain sales as their inventories increases as the year goes on. This should insure that GM’s US opportunities, what ever they might have been, have disappeared.

GM CEO Daniel F. Akerson tenure has been a failure and it is not a year old yet. Akerson was a poor choice to start. His most recent job as a chief executive was at XO Communications. He left there in December 2002, a little more than six months after the company went bankrupt. Akerson became the head of GM after what was supposed to be a search by the board for a world-class CEO never materialized.

One reason GM has not been more successful this year is that the quality of its cars is only considered average. This is true based on recent JDPower data on “initial quality.” Cadillac, Chevrolet, GMC, and Buick all received “about average” grades. GM did not do any better in the JDPower “reliability” study.

Whatever advantages GM had in 2010 when many of its competitors were weakened by size, recalls, of lack of new models, is gone. Its ability to be successful only becomes more improbable as this year passes into next.

Douglas A. McIntyre

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