GM Delivers December Flourish Amid Cooling Demand

General Motors closes out 2016 with a bang as its December U.S. sales soar past expectations, but inventories remain historically high to suggest the automaker may have to preserve market share in the coming months to balance supply with easing consumer demand.

GM’s daily sales last month rose 13.9% on a selling-days-adjusted scale to 318,904 cars and trucks from 290,230 in like-2015 and surpassed analysts’ expectations by as much as 10,000 units, according to WardsAuto data. There were 27 days to move the metal in December, compared with 28 in the same period a year ago.

The Detroit automaker closes the year with 3.0 million light-vehicle deliveries, or about 40,000 shy of its 2015 total. Early indications show its overall share of the U.S. market in 2016 fell to 17.4% from 17.7%.

The year-end fireworks came as GM works to balance a rapid shift in consumer demand this year to trucks, including red-hot CUVs, at the expense of cars. The automaker plans to slash production at five car-assembly plants in the U.S. for between one and three weeks this month to adjust to a trend that pushed GM’s inventory to 843,808 LVs, or 33.7% higher than 2015.

And while industry deliveries finished 2016 at a record-estimated 17.5 million, demand has plateaued and automakers likely are entering a period of declining monthly sales.  

The automaker tells WardsAuto it is comfortable with its inventories, given recent production cutbacks have yet to take effect, and is confident consumer demand will remain positive, although it will continue to monitor the marketplace and make adjustments where necessary.

Demand for GM products last month was dominated by truck buyers yet again, as pickups, SUVs and CUVs accounted for 72%, or 229,556 of its LV deliveries. The automaker says retail demand was particularly brisk, rising 3% vs. year-ago to 249,983 and marking its best December on that side of the business since 2007.

Chevrolet was the biggest benefactor, the automaker says.

GM also pumped more sales into the fleet channel, including a year-over-year rise in deliveries to rental-car companies where it has been curbing shipments to boost per-unit profitability and prop-up residual values.

“We finished 2016 with a strong December, reflecting the continued strength of GM’s U.S. retail and commercial businesses,” says Kurt McNeil, vice president-U.S. Sales Operations at GM.

“We begin 2017 well-positioned to continue growing our U.S. retail business, driven by all-new products like the Chevrolet Equinox and Traverse being launched into key, growing U.S. market segments,” he says in a statement.

Chevy sales grew 16.9% to 212,755 from 188,794 and closed the year flat at 2.1 million sales.

While holiday demand for GM’s bread-and-butter Chevy Silverado large pickup tumbled 10.7% to 54,272 from 62,992, the Chevy Colorado midsize pickup remained a favorite with sales soaring 23.7% to 9,431 from 7,909.

Sales of the Equinox jumped 29.2% to 27,195 from 21,827 as dealers cleared inventories ahead of a redesigned version of the 5-passenger CUV arriving later in the first quarter. Sales of the Traverse large CUV, which also gets replaced by a redesigned model in the coming year, rocketed 17.7% to 10,381 from 9,143. The Trax small CUV posted an impressive month on volume of 8,007 copies.

There were positives on the car side, too, perhaps due to greater activity in rental sales, with deliveries of the Malibu midsize sedan nearly doubling to 22,764 and demand for the Cruze compact car growing 6.6%, although on a relatively modest 17,324 units.

The hotly anticipated Bolt EV, which WardsAuto will classify as a Small Luxury CUV, made its debut at Chevy dealers last month with 579 takers.

GMC accounted for 63,415 December deliveries, up 9.7% from 59,941 year-ago. For the year, GM’s premium truck brand sold 546,628 units for a 2.2% decline from 558,697 in 2015. The Sierra large pickup was the volume leader in the month at 23,290 sales, although the result was down double-digits from year-ago and the brand closed 2016 with demand relatively flat vs. 2015 at 221,680.

The Cadillac luxury division of GM reported a year-over-year gain in the month of 7% on sales of 21,446, driven by 7,436 deliveries of the all-new XT5 5-passenger CUV. Cadillac closed the year down 3% at 170,006.

Buick sales totaled 21,288 for the month, up 6.6% largely on deliveries of the Encore small CUV at 7,755 units. Buick sales finished 2016 up 2.9% to 229,631.

Despite many forecasts for weaker demand in 2017, GM remains optimistic industry sales volumes for the year will remain strong.

“Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy and strong customer demand continues to drive a very healthy U.S. auto industry,” says GM Chief Economist Mustafa Mohatarem. “We believe the U.S. auto industry remains well-positioned for sales to continue at or near record levels in 2017.”

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