Kausfiles Smackdown: The Sequel

Over at Kausfiles, Mickey continues to gently dig at me for my observation that, over the past few months, the Detroit automakers are seeing their market share trend up, while Toyota and Honda see theirs trend down. But hey, a trend is a trend! General Motors (MTLQQ), for instance, is a bit above 19 percent now, but Edmunds.com, a consumer site that also monitors the industry, predicts it will rise to just over 22 percent in October, comparable with its share from a year ago.

Regardless, declining market share has been a GM reality for decades—the company at one time had so much share that it really had nowhere to go but down or into anti-trust prosecution. The Old GM was so preoccupied with holding share that it neglected what was obviously more important, profits. New GM has a reasonable opportunity to take its smaller portfolio of brands, several relatively successful new products, and given a recovery in the truck market in 2010, book some profits ahead of an anticipated pre-midterm-elections IPO.

Still, there are plenty of critics who have it in for GM, notably The Truth About Cars, which has been heralding GM’s demise since gas was 30 cents a gallon and Sinatra was headlining the Sands. (And yet ... GM lives! This has to be something like being Cuba, grimly eyeing the United States across that brief expanse of ocean, waiting decade after decade for the imperial giant to finally fall.) Market share is their cudgel. But GM no longer needs the kind of share it sustained even 10 years ago. It just needs its share to involve products that make money. GM was making money before 2005, on declining share, because it was selling a lot of profitable trucks and SUVs.

If you look at what it has now, in terms of divisions, it could make money again. Cadillac, Buick, and GMC all have good profit potential based on new product introductions. Chevy is a question mark, but it also has the burden of selling more cars and trucks than the other GM divisions—and the advantage of having GM’s top-selling vehicle, the Silverado pickup. Chevy will also have the most important car of 2010, the Volt extended-range electric vehicle, a halo car if there ever was one.

Make no mistake—GM has a ways to go. I’m also starting to see some typical GM executive moves, with a Bob Lutz-Bryan Nesbitt GM, driven by PR and media, up against a Fritz Henderson GM, motivated by cost-cutting, against an Ed Whitacre GM, propelled by the notion that GM is a trustworthy entity deserving of patriotic consumer support. Unlike Ford (F) and Chrysler, GM lacks an inspirational leader, aka Alan Mulally, or a swashbuckling global manager, aka Sergio Marchionne. GM is instead attacking the problem of rehabilitating itself from several different directions. The final piece of this puzzle might be to say so long to Fritz, and bring in a CEO whose faith in profits is unshakable. But we'll see. Fritz is hanging in there ... .