executives say brisk sales of large pickups this year, which helped push the auto maker’s May sales up 3.1%, could allay the need for summer discounts on its Chevrolet Silverado and GMC Sierra to clear dealer lots for redesigned models of the trucks.
“We’re using all the levers at our disposal,” says Kurt McNeil, GM’s top sales analyst. “But we have not had to make any kind of production adjustments and we’ve stayed pretty disciplined in the incentive arena.”
Auto makers often use incentives to reduce inventories of old models before a more-profitable redesign comes to market. But GM’s inventory of the ’13 Silverado and Sierra dipped to 93 days, or 220,466 units, at the end of May after sales of the pickups soared 23.1% to 61,524. So far this year, deliveries are up 21.7% to 281,531.
GM sold 252,894 cars and trucks in May, according to WardsAuto data, compared with 245,256 in a strong year-ago period. The auto maker also delivered 6,000 fewer vehicles to rental companies last month compared with year-ago, because those customers updated their fleets earlier in the year.
McNeil says GM’s large-pickup sales are benefiting from the housing comeback, which in April grew 13.1% according to the U.S. Commerce Dept. Consumer confidence now at a 5-year high, the Conference Board reports.
The combination could mean fewer margin-eating incentives on pickups as the ’14 models trickle into dealerships in the coming weeks. Last month, the average transaction price on the current-generation Silverado and Sierra rose $1,500, while incentives fell $300, compared with prior-year.
“We’re going to stay disciplined, but we’re going to stay competitive, too,” McNeil tells journalists and Wall Street analysts on a conference call today to discuss the auto maker’s sales results. “We’ve got to fight for our fair share.”
McNeil says GM’s Silao, Mexico, assembly plant reached normal line speed last month in its changeover to the ’14 model-year pickups. The auto maker’s Fort Wayne, IN, facility will add it this summer. A production timetable at Flint, MI, has not been announced.
The changeover will keep two-thirds of GM’s pickup-sales mix skewed to the older models until the end of the year, although 50% of production will be the redesigned unit.
Chevrolet sales increased 0.9% last month to 179,510 units. Silverado deliveries were up 25.3% to 43,283, while the Equinox 5-passenger cross/utility vehicle posted its strongest month ever, up 13.2% to 22,918.
GMC sales rose 7.0% to 41,584 units, with the Sierra up 21.7% to 16,061. Buick fell 3.1% to 17,982 as Enclave large CUV deliveries dropped 20.9% to 5,310.
Cadillac continued its hot streak in May, with sales surging 39.9% to 13,808 units. The all-new ATS compact sports sedan accounted for 3,249, while the recently released XTS large sedan drew 2,429 buyers.
McNeil says Cadillac is growing faster than it has in 40 years. “It will be interesting to see where we can take the brand when the all-new CTS debuts in the fall and the all-new Escalade arrives early next year.”