GM Seeing Windfall From New Large SUVs, Exec Says
On the large-pickup side of business, marketing exec Rick Scheidt says the automaker is “over the hump” in terms of building an inventory with a sufficient selection of body styles and powertrain options.
BLOOMFIELD HILLS, MI – Newly redesigned large SUVs from General Motors arriving at U.S. dealers carry far higher sticker prices than the previous-generation models, but that does not seem to affect buyers, who are scooping them up.
“We’re selling every one we can build,” says Rick Scheidt, vice president-Truck Strategy at GM.
Sales of GM’s large SUVs, the highly profitable Chevrolet Tahoe and Suburban and GMC Yukon and Yukon XL, declined 3.2% to 53,460 units in the first four months of 2014, according to WardsAuto data. Retail sales tell a different story, up nearly 110% last month for both the Tahoe and Suburban, GM’s volume sellers in the segment.
Third-party estimates show average transaction prices far exceed the older models, underscoring the pricing power in a segment where GM controls a 78% market share.
According to TrueCar, pricing for a ’15 Tahoe jumped 12.4% over the previous generation, while the Suburban’s sticker price rose 12.6%. Prices on the Yukon and Yukon XL jumped 10.1% and 7.7%, respectively.
Average transaction prices, or the average cost of the new SUVs after buyers add optional equipment, are up 18.8% for both the Tahoe and Suburban, 16.3% for the Yukon and 13.1% for the Yukon XL.
Scheidt says GM’s track record in the segment with the older models, combined with a number of new features, gives the automaker pricing power.
“It’s a segment where we’ve had good success in the past,” he says. “Our turn rates are exceptionally quick and we’ve added a lot of features to the vehicle. So far so good.
“In the early part of a launch that’s exactly what you’d like to have.”
The new Tahoe stays on dealer lots for an average of 17 days. The Suburban turns over more quickly, at 10 days.
The ATPs are riding customer preferences for loaded models. Last month, GM says, Tahoe models with the top-of-the-line LTZ trim accounted for 50% of sales, while 65% of Suburban sales were LTZs.
Newly available features help pricing, too. The SUVs now boast standard fold-flat second- and third-row seating, with power folding available. New options also include an 8-in. (20-cm) touchscreen with MyLink infotainment, up to six USB ports and six power outlets and available BluRay DVD rear-seat entertainment.
On the large-pickup side of business, Scheidt says he thinks the automaker is “over the hump” in terms of building an inventory with a sufficient selection of body styles and powertrain options.
Despite having completely redesigned large pickups on the market, sales of the Chevy Silverado and GMC Sierra through April fell 4.5% from year-ago to 210,086 vehicles.
“In a competitive business, you never declare victory; every month in is an intense fight,” Scheidt says. “But what makes feel comfortable is that fundamentally it is an outstanding product, and at the end of the day that is what carries you.”
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