Low Pickup Inventory, Mother Nature Undercut GM Sales

Third-quarter U.S. sales for General Motors tumble 11%, although like other automakers it faced steep year-over-year comparisons due to brisk sales in the July-September period in 2017 as the market was busy replacing cars and trucks lost to a pair of devastating hurricanes.

GM delivered 694,638 light vehicles in the quarter compared with 781,056 in the same period last year, according to Wards Intelligence data. GM recently switched to quarterly delivery reports from monthly, so the 11% decline is based on straight volume rather than daily sales.

GM says its performance in the quarter also was affected by limited availability of its large pickups, the Chevy Silverado and GMC Sierra. The automaker is transitioning between the ’18 and fully redesigned ’19 models, a changeover limiting output levels of the older truck.

Deliveries of ’19 models were exclusively higher-margin crew-cab models, although volume was minimal, GM tells Wards. The automaker hopes to sell more crew-cab models of the redesigned Silverado and Sierra and set up its body-style cadence to cash in on those early.

With the pickup switch, GM says it also chose to keep a lid on incentives while others in the market were more bullish. It added up to weaker results but average transaction prices $4,000 higher than the industry average in the period.

“We entered the quarter with very lean inventories of our 2018 model full-size pickups, so we focused on driving a very strong mix of SUVs, crossovers and mid-size pickups,” says Kurt McNeil, vice president-U.S. Sales Operations.

“We also transitioned to the 2019 model year far earlier than some key competitors, which allowed us to reduce incentives while others raised them sharply,” McNeil says in a statement.

GM says the third-quarter seasonally adjusted annual rate of sales was 16.9 million units, compared with 17.2 million year-ago. Despite the pullback, the automaker expects another full-year SAAR eclipsing 17 million units.

“The U.S. economy and auto industry remain strong,” says GM Chief Economist Elaine Buckberg.

“A new United States-Mexico-Canada trade agreement will reduce uncertainty for the auto industry and all three countries. Consumer confidence is high and rising, thanks to the robust job market, faster wage growth and the boost to take-home pay from tax reform,” she adds. “We believe 2018 will be the fourth year in a row with total industry sales above 17 million units.”

The three countries struck a new tri-lateral free trade accord earlier this week, although important adetails including tariff levels on imported vehicles and parts to the U.S. from Canada and Mexico remains unclear. Steel tariff recently enacted by the Trump Admin. also cloud the economic outlook and financial sturdiness of automakers.

But Americans continued their love affair with trucks over the summer months. The Silverado and Sierra combined for nearly 185,000 sales, although down 12.5%, while the Chevy Tahoe, Suburban and GMC Yukon line of large SUVs drew 65,419 takers, up 12%.

The newly redesigned Chevy Traverse large CUV saw sales rise 3.1% to 32,908 units, while its Buick Enclave platform-mate enjoyed a 7.1% sales spike to 12,807. However, sales of the 3-row GMC Acadia, a slightly smaller take on the Traverse and Enclave, were nearly halved to 13,485.

Sales of the Chevy Equinox 5-passenger CUV, which is GM’s No.2 seller next to the Silverado, fell 1.6% to 78,014.

Deliveries of GM’s two electrified products were mixed. Sales of the Chevy Volt plug-in grew 22.9% to 5,429 units, while demand for the Chevy Bolt battery-electric vehicle in the quarter slipped 41.1% to 3,949.

Chevrolet brand sales in the quarter dropped 11.4% to 485,019; Buick sales fell 7.3% to 45,911; Cadillac sales were off 10.7% to 37,291; and GMC sales slipped 11.3% to 126,417.

GM says its inventory levels fell by 22,000 year-over-year, and rental deliveries were tracking an intended 10% of overall sales for the year despite a 5% uptick in fleet deliveries in the latest quarter.