Although demand for full-size pickups has remained relatively steady, south of the border, General Motors has seen a recent drop in truck sales. Executives at GM have said that part of the reason is due to aggressive incentives being offered by rivals Ford and Chrysler.
Automotive News reported that Alan Batey, GM’s current U.S. sales chief, said that executives “were shocked” to see Chrysler’s Ram division offering incentives at “five thousand bucks a unit.” Batey also said that he doesn’t think such programs are sustainable long-term.
A spokesperson for Chrysler however, said that discounts on current Ram models “were within a few hundred dollars,” of those offered by rivals on their 2012 models. Ram has been paying particular attention to spiffs on its 2012 ½ ton trucks, as it encourages dealers to clear remaining inventory in preparation for the 2013 Ram 1500, which boasts a significant number of improvements.
GM also faces an issue in that both its full-size Chevrolet Silverado and GMC Sierra ½ tons haven’t seen a significant update since 2007, which currently makes them among the segment’s oldest models. And in many cases, a lack of change can serve to keep away customers, unless dealers are able to offer substantial incentives.
GM noticed that rivals were increasing spiffs on their pickup lines early last month but decided not to follow them in an effort to build “equity” into its truck sales. “We’ve found that adjusting incentives on a short-term basis to our competition is highly inefficient because the dealers can’t get behind it fast enough to make an impact,” said Mark Reuss, GM’s North America president. “We’re trying to run this on a longer-term, strategic basis.”
Given that lower sales have boosted GM’s pickup inventory supplies to 139 days (up from 110), so far, the automaker has said it hasn’t planned to cut back production. Kurt McNeil, GM’s vice president of sales operations said that the shrinking demand and lack of incentives could see the automaker exceeding its year-end inventory estimates for trucks, requiring a need for using “all levers to influence inventory.”
GM is planning to launch a heavily revised Silverado and Sierra for 2014, in the meantime, dealers might struggle to move stocks of existing models, if rivals continue to offer big incentives. Helping alleviate the issue somewhat has been strong U.S. demand for GM cars and crossovers in November, which saw gains of 19 and 9 per cent respectively, versus an 11 per cent decline for trucks.
