General Motors Company (GM) is an American multinational corporation established in 1908. The company was the world’s largest automaker from 1931-2007 and held 50% of the market share in the United States. At present, General Motors is ranked 18th on the Fortune 500 rankings of the biggest US corporations based on revenue.
In 2020, General Motors generated revenue of over $122 billion, 11% lower than the previous year. A labor union strike in the US in 2019 has stalled vehicle sales, leading to only 7.7 million vehicles sold. This is 8% lower than in previous years. This was quickly followed by a decrease in demand for vehicles due to COVID-19.
In line with these, the following is a General Motors SWOT analysis that highlights the company’s strengths and weaknesses. Also presented are the potential external opportunities and threats.
General Motors continues to accelerate its growth strategies. Despite a general decline in the demand for vehicles in 2020 due to COVID-19, GM has maintained a competitive advantage due to its strong brand positioning. Currently, the company maintains 10 different brands: Chevrolet, Buick, GMC, Cadillac, Opel, Vauxhall, Holden, Baojun, Wuling, and Jiefang. Though revenue steeply fell in 2020, the company plans to capitalize on its brand positioning by launching new vehicles at scale.
General Motors has been enrolled in the U.S. Environmental Protection Agency (EPA) ENERGY STAR energy-reduction challenge since 2010. The company’s Chief Sustainability Officer, Dane Parker, stated that GM is “committed to creating a zero-emissions future.”
Aside from consistently being awarded the annual ENERGY STAR award, the company has also saved up to $237 million in energy costs and reduced up to 1.8 million metric tons of emissions. When General Motors enrolled in the EPA challenge, the company committed to a 20% reduction in carbon emissions by 2020. This was met as early as 2017. In 2020, the company committed to source 100% renewable energy in all US facilities by 2030 and global facilities by 2040.
Limited Presence in Developing Countries
Despite its market dominance, global sales of General Motors are largely restricted to developed countries. For example, the company does not sell its Cadillac vehicles in Brazil and Argentina, while its sole presence in India is through Chevrolet.
In 2015, General Motors developed a growth strategy to penetrate emerging markets such as India, Brazil, China, South Africa, and Mexico. However, many aspects of this strategy were halted in the last two years.
In 2017, the company halted retail sales in India and South Africa, focusing on “the right markets to drive profitability, strengthen our business performance and capitalize on growth opportunities for the long term,” explained Mary Barra, CEO, and Chairperson of General Motors.
In addition to pulling back from developing countries, they have also retreated operations in critical markets like Russia and Western Europe.
Overdependence on the US Market
In 2015, over 60% of the company’s annual revenue came from its US market. Currently, the company is focusing on increasing its market share in China. Notably, its competitors rely less on their home markets for generating revenue. For example, Ford receives only over half of its annual revenue from the US, while Toyota receives only over 40% from Japan.
A history of product recalls has also damaged the company’s reputation. In 2014, General Motors had to recall almost 3 million Chevrolet Cobalts, Saturn Ions, and other small vehicles due to faulty ignition switches. The company promised a 100% repair rate but was not able to meet the quota.
Growing Demand for Electric Vehicles
In January 2021, General Motors released a statement that the company plans to sell only zero-emission vehicles by 2035. This is in line with US President Biden’s executive order on climate change. GM has tried to develop strategies to manufacture and market electric vehicles since the mid-1990s, and now, the company has embraced the technology.
The global market for electric vehicles was valued at $162.34 billion in 2019. The projected growth is up to $802.81 billion by 2027. The Asia-Pacific region has generated the most revenue, followed by North America. A focus on manufacturing electric vehicles may allow General Motors to penetrate emerging markets.
Increased Demand for Autonomous Vehicles
Cruise, a subsidiary of General Motors, has begun testing its own line of self-driving vehicles last December 2020. The company sees self-driving cars becoming commercially available in the near future. Dan Ammann, CEO of Cruise, said that “What this represents for Cruise and, I think, the self-driving industry more generally is you’re seeing fully driverless technology out of the R&D phase and into the beginning of the journey to being a real commercial product.”
Currently, the global market share for autonomous vehicles is over $700 billion but is expected to reach over $1.6 trillion by 2025.
Growing Global Competition
General Motors is facing increased competition from emerging automobile manufacturers. GM faces direct competition from new companies such as Google and Tesla, as the two are racing to get hold of the global market share for autonomous vehicles.
The company is also facing threats in China, the country that brings GM the second largest annual revenue. Chinese manufacturers are currently offering similar vehicles at lower prices.
During the beginning of 2020, the global economy logged its 10th consecutive year of growth. This quickly changed due to COVID-19. As the pandemic continues to spread, countries struggle due to increased rates of unemployment, diminished exports, and an increase in debt.
The economic disruption has led to billions of dollars in losses for the automotive industry, with recovery projected to be several years away. Aside from a decrease in sales and revenue, companies have also impeded manufacturing due to a shortage of essential parts.
General Motors SWOT Analysis: Conclusion
General Motors saw a decrease in revenue by up to 11% in 2020, particularly due to the decrease in automobile demand caused by the pandemic. The company needs to develop new organizational and operational structures in order to recover. Currently, GM is planning to focus on electric vehicles but face steep competition from new and emerging companies globally.
For General Motors to recover losses from the pandemic and shift to a new line of products, a focus on new sales and marketing channels is recommended. A resilient supply chain is also necessary to combat current shortages in essential parts.
A SWOT analysis is a technique for strategic planning that helps identify the strengths, weaknesses, opportunities, and threats of an organization. This framework ensures that objectives are clearly defined and that both internal and external factors related to a business or venture are identified.
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