GM Offers Incentives On Newly Introduced Pickups. Were They Priced Too High To Begin With?
Usually, in the U.S. pickup truck market, whichever company has the newest truck normally gets a bump in sales. While it’s hard to get Chevy guys into Fords and vice versa, about 6% of the market does shift to the most recently updated pickup because of businesses making decisions based on dollars and cents, not brand loyalty.
General Motors has the newest trucks on the block in the 2014 Chevy Silverado and GMC Sierra, but in a growing overall market GM’s pickup trucks last month saw an annual decline in sales. Some analysts say that GM priced their new pickups, a key profit generator for the company, too high. Supply issues with parts for the 5.3 liter V8 have also restricted sales. An analyst at Morgan Stanley, cited by Automotive News, also attributed the September decline to “stair step programs” for dealers and other incentives that were offered in August which pulled sales forward. Now, GM is taking the rare step of offering incentives on recently introduced vehicles, the new pickups, apparently to compete with heavily discounted trucks at Ford and Ram.
Year to year sales of GM’s full size pickup trucks were down 8% in September. The new 2014 models made up 60% of sales as they move out remaining stock of 2013 trucks, which the company says are dwindling. Overall GM sales were down 11%, attributed to slower sales of Chevrolet vehicles and a steep drop in rental-fleet delieveries.
Now GM has told dealers that for October the company will give customers $1,000 cash rebates on the 2014 Silverado, along with $500 in incentives on premium trim packages like the Texas and All Star editions. There is also a “sales manager bonus program” that gives dealers $200 when they sell particular Silverados. Kurt McNeil, GM’s vice president of U.S. sales operations, confirmed the incentives to AN.
The early production mix has favored V8 models with more expensive trim and equipment and McNeil said that sales should get better as dealers get more V6 powered trucks and less expensive option packages. Some dealers have complained that after early adopters and loyal GM truck owners bought their trucks when they first came out, the new models have become a harder sell because of the discounts at Ford and Ram.
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@Big Al--If GM is going to rely on Colorado/Canyon then they need to have a higher quality product priced competitively and offer the diesel as an option. Over pricing and then offering large discounts is not a sustainable practice. Price the truck fairly and offer a good quality product and stand behind the service of your product. What Highdesert Cat has said about his experiences with a Saturn is a lesson that every manufacture should learn from and not repeat. Saturn started out with a quality product and then cheapened it. GM needs to put more emphasis on quality and reliability and less emphasis in gaining back its Number 1 position from Toyota. Make a good quality and fairly priced vehicle and the customers will buy your product.
@Jeff S - I agree. GMC is in trouble with the new Sierra and Silverado if they have to offer rebates right off the start. New models tend to have rebates at the end of the year to help clear out old inventory. That would mean 2015 for the 2014's. The Colorado had better be stellar because the new 1/2 tons aren't. I do like both of the 2014 GM siblings but nothing really makes me go WOW. The 5.3 is close to the 5.0 in power, the body is a huge step up only to the GMT900's. Disc brakes in the rear isn't new. A 6.5 box crew cab isn't new either. I'd like to see minimal overlap with the GMC 1/2 tons. The high end Colorado should be comparably priced to a mid level Silverado/Sierra. I's like to see Colorado in a Raptor type package. Ram has the HD Power Wagon, Ford has the 1/2 ton Raptor, and GMC should have the small truck off-roader. The Tacoma Baja isn't extreme enough in my books to count.