GM's Pickup Truck Profits Headed for Catastrophic Collapse

Robert Farago
by Robert Farago
gm s pickup truck profits headed for catastrophic collapse

Automotive News [AN] reports that GM's recent cutbacks in pickup truck production weren't deep enough. While Ford, Dodge and Nissan dealers are all sitting on a relatively health supply of full-size pickups– 100, 120 and 105 days respectively– GM's inventory channel is stuffed to the gills. "As of Dec. 1, inventories of the Chevrolet Silverado (153 days supply) and GMC Sierra (150 days) were bloated despite $5,000 rebates on 2007 models." The automaker's desperation to move the moribund metal is showing-up at the sharp end. "Ken Fichtner, owner of Fichtner Chevrolet in Laurel, Mont., says he took an additional 10 Silverados last month, at GM's request. This month GM asked him to take an additional 20 trucks, and he said no. 'I am sitting on a 13-month supply right now," Fichtner says. 'They wanted me to go to an 18-month supply but we only sell 10 a month, and I'm in the heart of truck country!'" As Frank Williams predicted back in April, there's only one way this is gonna go: GM will have to put massive incentives on its pickups, dinging residual values and further eroding the profits delivered by GM's former cash cows. And THEN cut production even more.

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  • Jthorner Jthorner on Dec 26, 2007

    "A well done Ody cargo van would get lots of consideration IMO." Certainly an interesting idea. Chevy sold a lot of Astro vans in that configuration and Ford made the Aerostar cargo vans for years as well. What is crazy is that GM and Ford simply abandoned those markets. First of course they let the vehicles grow multiple layers of moss underfoot through over a decade of neglect, then they simply shut 'em down. Really sad. How many market segments can a mass market company give up on and still be a mass market company?

  • 50merc 50merc on Dec 26, 2007

    Why make way too many trucks? Maybe this is one reason: GM has enormous overhead and labor expenses that continue even if it doesn't make vehicles. By building up the inventory of unsold trucks, the expenses related to building those vehicles become an asset; i.e., inventory on hand. Thus, those 2007 expenses embedded in inventory won't hit Cost of Sales until the inventory is sold, which will be 2008 for most units. It's a way of kicking the can a little bit farther down the road.

  • Ihatetrees Ihatetrees on Dec 27, 2007
    carguy: the extra environmental damage is always worth it to the generation that will not have to pay for the consequences. I pay - via taxes. If the taxes are not enough, raise them. If you don't have the guts to do that, then regulate them to death. But be prepared for political blowback when the price is finally paid by too many. Tax energy and/or things that consume it - gasoline, diesel, natural gas, engine displacement, car weight, home sizes, home energy use, second homes, etc. If Prius driving suburban soccer mom wants to make performance vehicles more expensive, I'll work to have the regulatory state make her 3500 sq. foot house too expensive to heat...
  • Ihatetrees Ihatetrees on Dec 27, 2007
    whatdoiknow1: Your kidding us ,right? No. Only a totally selfish uninformed fool would push a Tahoe sized vehicle to 90mph on a public road on a busy travel day like Christmas. Correct. I should have added "good driving conditions" to my "good weather" take. I wouldn't drive ANY vehicle 90MPH on a crowded road. Well, maybe a Euro road... I don't know about the Tahoe. It is one of the more suspect handling SUVs (compared to the relatively good-mannered Exploder). However, I suspect that in a well maintained Tahoe, 90mph can be safer than 75mph. Example: You're crossing Montana/N.Dakota on your way to Minneapolis. The time/fatigue saved is worth it compared to the cost ($$$ + environmental damage). Now dont get me wrong I love a good fun “drive” that involves “extra” speed. The difference is I have seen what actually happens to victims of high-speed crashes. It's not a difference. I've seen it too. SUVs by design are NOT meant for high-speed travel! I disagree. Some are fine. As long as your respect the fact that it IS a truck. Just because some auto-makers are stuffing over-powered engines into these things does not make them any safer. It makes them faster and only increases the danger factor for everyone sharing that road with the idiot that thinks he is safe traveling at 90 mph in a vehicle that is uncontrollable in any but the best of circumstances. I understand your frustration. However, I'd rather focus on the idiots, not the vehicles they drive. I would like to see states adopt better licensing standards for vehicles with certain weight and horsepower characteristics. Explain to me how it is safe for someone to drive a vehicle with just about ZERO emergency manuverabilty on a public road full of other drivers? It's not. And I never advocated that.