General Motors, basking in record transaction prices and double-digit October sales increases for most of its models, is trying to wean itself off mammoth cash incentives that stoke the full-size pickup-truck market. In a conference call earlier today, U.S. sales and operations VP Kurt McNeil said GM would become more "disciplined" in doling out regular incentives that usually lop several thousands of dollars off the sticker price.
"Our dealers have transitioned to selling the deal on the old truck to selling the value on the new trucks," McNeil said.
A day earlier, The Wall Street Journal reported GM was about to "shun lavish discounts" on 2014 models of the Chevrolet Silverado and GMC Sierra in an effort to improve resale value and increase profits. While that seemed to imply GM would cut all truck discounts, spokesman Jim Cain told us that the automaker wants to keep them "just enough to drive demand but not so much as to hurt resale value, profitability, etc."
Through mid-October, GM spent an average of $3183 on pickup incentives while Ford closed the month at $4400. Chrysler did not disclose its spending. As expected during a model changeover, GM is discounting 2013 Silverado and Sierra models by up to $6000, although it pales next to Ford's maximum $9000 rebate on the 2013 F-150 and Ram's $7950 off last year's 1500. (For what it's worth, GM awarded David Ortiz a free Chevrolet Silverado High Country for winning the World Series, so there's still plenty of dough to pass around.)
Pickup sales are soaring. The F-series finished its sixth consecutive month of 60,000 sales, bringing the yearly total to 623,309, or 20 percent higher than the blue oval achieved in 2012. GM is also up 20 percent with 555,608 Sierra and Silverado pickups sold through October. Ram finished the month with a 23-percent gain to 292,633 pickups.
GM recorded its highest-ever average transaction price ($32,864, according to J.D. Power) across all cars and trucks. That momentum, along with positive press for its 2014 Corvette and 2013 Cadillac ATS, has GM executives declaring a "product-driven" strategy to replace its rank-and-file reliance on spreadsheets. To wit, GM is offering just $1000 cash incentives on its 2014 Silverado and Sierra.
"There will be no ghosts of the GM past," said Mark Reuss, president of GM North America. While GM's product is very good, dealers could be left dry if Ford continues its winning streak into December, the busiest month for pickup sales as small businesses and fleets lap them up for tax write-offs. Through October, dealers had Sierras and Silverados for 94 and 106 days, while Ford has about a 90-day supply.
- Comparison Test: 2014 Chevrolet Silverado 1500 vs. 2013 Ford F-150, 2013 Ram 1500
- First Drive: 2014 Chevrolet Silverado / 2014 GMC Sierra 6.2L V-8
- Instrumented Test: 2014 Chevrolet Impala 2.5 LT
As Ford rolls out the 2014 F-series this month, chief sales analyst Erich Merkle said he doesn't expect incentives to change.
"We've seen our competitors' incentive spending go high and we've seen it go low," he said. "We tend to take a very consistent approach."
In a vehicle segment that feeds off these instant discounts, we're not sure GM can hold onto low incentives for very long before the bean counters demand another price war.
from Car and Driver Blog http://blog.caranddriver.com
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