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Monday, June 16, 2008

GM's Next Battle: Win Customers Back

General Motors resembles an aging starlet fighting the ravages of time: Despite a crash diet and costly makeover, her pool of loyal admirers keeps shrinking.

At GM's annual meeting Tuesday morning, CEO Rick Wagoner will outline new revamp plans, likely including cost cutting and an effort to ramp up output of more fuel-efficient cars.

But a dramatic turnaround won't happen unless GM can persuade owners of import vehicles to buy its cars again. Drivers these days don't show much allegiance to Detroit. Even with dealers doling out cash rebates, warranties and other incentives, some 54% of car buyers won't even consider driving a domestic marque, according to J.D. Power & Associates.

GM has made headway in winning back car drivers. Sales of the Chevy Cobalt and Malibu have jumped this year. But it seems to be playing catch-up to Honda and Toyota in the loyalty race. Only 3% of GM vehicles sold through its dealerships go to customers trading in a Honda or Toyota, according to J.D. Power.

GM's sales data for May, also due Tuesday, are expected to show another decline that could push its domestic market share to less than 20%. The skid, in short, might not be over yet.

Article by Mark Gongloff and Karen Richardson (Wall Street Journal News)

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