According to a report by Reuters, while General Motors was introducing new Chief Financial Officer Chuck Stevens to Wall Street analysts and talking tough about maintaining premium pricing on its full-sized pickups, the company had just increased discounts on its Chevy Silverado and GMC Sierra pickups in February to help slipping sales of those same trucks.
Telling analysts that it intends to hold the line on pricing and maintain margins particularly in the highly profitable, full-size truck market despite a drop in volume and market share, GM said marketing strategies are in the works to gain traction for the company at the lower end of the truck market without giving up margins at the upper end.
Two industry research firms noted rising discounts on GM trucks in February. Autodata found average per-vehicle discounts on the 2014 Chevy rose $500 from $3,715 in January to $4,218 in February, while sales fell 12 percent from February 2013 and Chevy’s market share of the full-size truck segment dropped more than three points to 22.5 percent.
Meanwhile, Ford also reduced its discounts in February on its sales-leading F-series pickups to $2,835, and F-Series sales have risen nearly 3 percent from the previous year, to 34 percent of the segment. While the Silverado and GMC Sierra were redesigned last summer, this came at a time when Ford has yet to release its redesigned F-150, and won’t until late this year.
A GM spokesman said February spending rose to help reduce inventories of older Silverado and Sierra heavy-duty models as redesigned HD versions began to arrive at dealerships. Average incentives were skewed by discounts averaging up to $5,972 on Silverado 2500/3500HD models, and $3,593 on the light-duty Silverado 1500 according to Edmunds.com. GM has a bit more wiggle room with incentives, because its average per-vehicle transaction prices, which includes discounts, remains higher than Ford’s.
In February, GM’s average transaction price on its U.S. vehicles was $34,090, down from $34,306 in January, according to TrueCar.com. In comparison, Ford’s ATP rose slightly to $32,625, from $32,307 in January. While GM says it can’t build enough of high-end trucks, sales of low-end V6 models are weak. Analysts at the meeting with the GM CFO noted that GM’s transaction prices, especially on pickups, “provides some room for increased incentive use if needed” later in the year.
Both Chevy and Ford dealers have offered large discounts of $9,000 and more on these trucks, with dealers contributing a hefty share. Full-size trucks are among the most profitable vehicles in the industry, accounting for more than two-thirds of U.S. automakers’ global pre-tax earnings even though they make up just 16 percent of North American vehicle production.
With all these factors in mind, now would be a great time to buy if you happen to be in the market for a GM pickup.