July Sales Sluggish for GM, But No Plans to Change Course
The drop in volume was somewhat expected, executives say, predicting new product and a rebound in fullsize-pickup demand will help improve the sales picture during the rest of 2012.
General Motors reported disappointing sales in July, but that’s apparently not an indictment of former marketing director Joel Ewanick, who resigned under pressure over the weekend.
The auto maker is sticking with its marketing program and anticipates no changes in brand strategy or advertising plan, says Alan Batey, vice president-U.S. sales and service and named Ewanick’s interim replacement on Sunday.
“There is no change in direction; there is no change in priorities,” he tells financial analysts and reporters in a conference call to discuss July sales. “We’ve always been one team. There’s no disruption and no changes. It’s all about execution.
“This had nothing to do with our strategy. You shouldn’t read anything into this,” Batey adds, alluding to Ewanick’s dismissal, reportedly over financial concerns surrounding a soccer-pegged marketing program in Europe. “Are we changing strategies, evaluating any of our partners? No.”
GM sold 201,237 vehicles in July, a 6% drop in volume from year-ago, but the auto maker says its retail deliveries fell only 3%, while it cut rental-fleet volume 41%.
On a daily basis (24 selling days this year, 26 in 2011) GM’s overall light-vehicle sales slid a more-modest 2.8%, according to WardsAuto data.
The performance is expected to drop the auto maker’s market share, at 18.2% through June, to below 18% for the month.
“We knew July would be a tough month,” says Kurt McNeil, vice president-sales operations, citing an unfavorable comparison with year-ago, when low inventories for Japanese competitors gave GM a competitive advantage. “But we believe we are very much on plan.”
New models coming later in the year, including replacements for its Lambda-based midsize CUVs, will help the auto maker regain ground, executives believe.
Commercial-fleet sales climbed 41% in volume in July, GM says, marking the 28th straight month of increases.
Cadillac was the only brand gaining in the month overall, with sales up 20.7% in volume. On the retail side, both Cadillac (20.3%), driven mainly by XTS sales, and Buick (2.0%) recorded increases.
Buick’s retail rise came despite a 14.7% decline in overall volume, the biggest dip among the auto maker’s four North American brands. GMC unit sales fell 9.0%, while Chevrolet deliveries sagged 6.8%, largely on a 39.3% plunge in Cruze demand and 36.8% drop in Malibu sales.
The Cruze decline is a result of the Japanese having restored inventories and almost zero rental-fleet deliveries in July, McNeil says, adding the car continues to be sold with low incentives and is drawing high average transaction prices.
GM says Malibu’s volume decline largely was caused by low inventory. Supply of outgoing ’12 models has dwindled to 28 days, and dealer inventory of new ’13 Malibus with base 4-cyl. powertrains remains scarce as the auto maker continues to ramp up production.
Chevrolet’s 5.4% falloff in retail volume comes despite a buyback incentive offer launched July 10. Executives say they are sticking with the program that promises to repurchase vehicles from unsatisfied customers at least through its planned end-of-August expiration.
“We got a late start in the month,” Don Johnson, vice president-Chevrolet sales and service, says, pointing out the program didn’t launch until July 10 and wasn’t heavily promoted until the Olympics got under way July 27. “Tracking studies on ads came in strong. Web traffic is up. We expect to see a payoff as we get into August.”
Fullsize-pickup sales were disappointing, executives admit, but there are no plans to cut production despite inventory levels at a high 136-day supply. GM expects demand to rise during the remainder of the year and wants to keep dealers stocked with a buffer of current models as it changes over to all-new versions beginning later this year.
“I wouldn’t draw any conclusions from July,” Batey says of overall market demand for big pickups. “We’re not seeing (the month) as a warning sign. In fact, the pickup market from this point on will steadily increase. That’s still in our forecast.”
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