By on April 30, 2019

General Motors’ first-quarter earnings report revealed turmoil in international markets and a shrinking presence in North America, but net income rose to $2.1 billion, up from $1.1 billion a year ago, and adjusted earnings per share ($1.41) beat out estimates of $1.11. Still, that wasn’t enough to stop its stock from sliding in pre-market trading, as revenue of $34.9 billion undercut analyst estimates of $35.28 billion. Pre-tax earnings fell 11 percent.

In its report, GM wanted to talk about trucks. You know the ones — the revamped 2019 Silverado and Sierra 1500 crew cabs, now featured in half of the pop-up ads on your author’s computer and phone, advertising 0% financing.

Trucks are key to the company’s health, given how much it relies on its home market. The automaker reports average transaction prices $5,800 higher than the crew cabs the new models replaced. Production of regular cab and extended cab pickups began in March, GM said, with revamped heavy duty models arriving later this year.

GM Chief Financial Officer Dhivya Suryadevara claimed the company’s ongoing restructuring efforts saved the automaker $400 million in Q1 2019, though a sales slump in China and pressures elsewhere conspired to sink revenue at home and abroad. In China, a key growth market for GM, income fell 37 percent to $376 million, with sales falling 18 percent from the same period in 2018.

North American revenue dropped 1.4 percent compared to Q1 2018, with margins falling from 8 percent to 6.9 percent. Income fell $300 million to $1.9 billion. In the U.S., sales fell 7 percent in the first quarter while global sales declined by 10 percent.

Market share? That dropped, too, from 17 percent to 16.1 percent in the United States. Globally, GM’s share fell from 11.4 percent to 10.6 percent. This year has already seen GM kill off the Chevrolet Cruze, Volt, and Buick LaCrosse, with the Cadillac XTS and perhaps the Chevrolet Sonic to follow. Interestingly, U.S. pickup market share fell from 31.9 percent to 28 percent between the first quarter of 2018 to 2019. We’ve already told you how Ram kicked the Silverado to third place in the U.S. sales standings.

Amid healthy competition from revamped rivals, GM hopes to reclaim more of the market with a full line of half-ton pickups and its looming next-gen HDs. Still, many feel the new trucks should be performing better. GM truck sales fell in the first quarter as inventory rose.

 

Other data shows fleet sales rising from 23 percent of total U.S. sales in Q1 2018 to 25 percent in the most recent quarter. Average incentive spend per vehicle fell $236 to $4,589.

[Images: General Motors]

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62 Comments on “GM Reports Profit Boost As Sales, Market Share Shrinks...”


  • avatar
    PrincipalDan

    Pssssssssssssss…

    THE MSRP IS TOO DAMN HIGH!

    (Referencing an earlier article on this very site.)

    I know MSRP doesn’t mean much in OTD pricing but the mid-trim trucks (SLE, LT, XLT) with popular options are being advertised in the low $40s.

    • 0 avatar
      thegamper

      All of the US automakers are extremely overexposed to market shifts, economic slump, fuel supply shocks by relying so heavily on trucks. It is a terrible shame, but they are so dependent on trucks, anything that threatens that lifeline will sink the companies short term and really threaten long term sustainability.

      As Principal Dan mentions, they may even be overexposed to consumer education. Eventually people will realize that the sticker prices on their trucks have no relationship to the cost to manufacture and get tired of paying over HUGE profits to the automakers.

      Can you think of any other aspect in life where average people are so willing to give away SOOOO much money for nothing than when purchasing a Pickup truck? People will catch on.

      • 0 avatar
        PrincipalDan

        Given their high resale value, if you are already a truck buyer then it’s easier to keep the cycle going.

        Trade truck, buy truck, trade truck, buy truck…

        However if you are looking to get on that merry-go-round the price of entry is getting higher and higher.

        IF that eventually starts to impact resale values negatively and hard enough for the Average Joe to notice, then the party may be over.

        • 0 avatar
          cdotson

          “Trade truck, buy truck, trade truck, buy truck…

          However if you are looking to get on that merry-go-round the price of entry is getting higher and higher.”

          Don’t run in circles all your life just hoping to grab a horse on a debt carousel.

          • 0 avatar
            PrincipalDan

            @cdotson, I’m saying many people operate that way, especially those who use their pickups as family sedans.

            Let’s use Ford as an example:

            Buy F150 XLT – drive for 5 or 6 years. Go to trade it in, when you see how much the dealer is offering you buy a Lariat or a King Ranch trim. 5 to 6 years later you come back and see how much you’re being offered in trade and you buy a Platinum or a Limited.

            The explosive market share gains in trucks during the past 10 to 20 years has not been driven by the guy who buys an XL, holds it for 15 years and 300,000 miles.

            I’m not passing judgement on people and what they do with their money (or saying that its my plan) I’m saying that truck sales are basically built on a house of cards.

      • 0 avatar
        sooperedd

        Many already have caught on. I will probably never buy another new car, even though I can pay with cash. Having bought about a dozen new vehicles in my life prices are ridiculous. I will keep what I have as long as I can and look at used in the future.

        6, 7 and 8 year loans have pushed prices artificially above the value you receive and as long as the chumps keep buying it won’t change.

        • 0 avatar
          jack4x

          Meh.

          Compare what you get for capability & features in a truck for $40K vs what you get in a sedan or especially a CUV, and the truck doesn’t look overpriced at all.

          • 0 avatar
            PrincipalDan

            Capability? YES +10000

            Features? NO. Can I get a Denali, Platinum etc for $40K?

            Can I get an Impala with heated/ventilated seats, heated steering wheel, sunroof, and premium stereo for $40K? Absolutely.

          • 0 avatar
            jack4x

            Sure, but you can get all those things below the Platinum/Denali level too. A midgrade Lariat/LTZ/Laramie can be optioned with everything you listed and you would likely be out the door in the mid-high 40s.

            No, it’s not as cheap as the Impala, but it’s not like it’s night and day either. For the tradeoff in capability, resale, and longevity, I think it’s still a good value.

          • 0 avatar
            SSJeep

            Exactly, I dont think mid-trim pickup trucks are overpriced in the least. Yes, you can get similar features in a sedan or CUV, but you dont get ride height, hauling capability, 4wd, etc. Its a terrible comparison.

            Platinum-level pickups at $70k are, however, very overpriced.

          • 0 avatar
            Vulpine

            @jack4x: I expect for most truck sales, hauling capability is a significant factor, outside of towing for those who buy RV trailers.

          • 0 avatar
            DenverMike

            The even better value are the “basic” pickups, rubber floor, vinyl (mesh) seats, steel 17″ wheels (except STX, Tradesman, Express) that allow ala carte Crew cabs, 4X4, Cruise, power windows/locks, side steps, slider back glass, fog lights, etc.

            These might not get you the best “resale” bang for your buck, but all the luxury (CARPET!?!) in a pickup makes zero sense in truck you’re actually gonna use?

            $40K isn’t much if it’s exact what you’re looking for and want to keep it for an indefinite time frame. $25K (transaction) was a lot for me (or many shoppers) to spend on a new, rubber floor, etc, XL (STX) F-150 Supercab 4X4 way back in ’05, but I still use (abuse) it daily, it still looks great, I enjoy it, and of course it’s paid for itself many times over.

            What ever you buy, avoid short-term thinking, and never be pennywise just to be dollar foolish.

          • 0 avatar
            highdesertcat

            DenverMike, great advice that I passed on to my best friend who is currently looking to retire/replace his 1993 S-10 2WD V6 Ext Cab.

            Although I am trying to lead him to Tundra, his wife favors the 2019 Silverado 4dr/Short Bed, in Silver Ice.

            He is a tightwad and hates the thought of parting with the money that it would cost him to buy a full-size half-ton and he told me he may just buy a midsize like a new Colorado or Tacoma to replace his old S-10.

            I wonder how this will all wrap up for him, and may even have to drive him out of town to Las Cruces, Albuquerque or El Paso to pick up his selection.

            The dealers in our town need to make too much money on whatever they sell because they have neither the sales volume nor the selection of the bigger cities.

      • 0 avatar
        Detroit-X

        “All of the US automakers are extremely overexposed to market shifts, economic slump, fuel supply shocks by relying so heavily on trucks. It is a terrible shame, but they are so dependent on trucks, anything that threatens that lifeline will sink the companies short term and really threaten long term sustainability.”

        … combine that with inept leadership, and well …

        • 0 avatar
          CaddyDaddy

          Pre-Bankruptcy: “Sir…. we are loosing money on every unit.” “Have no fear, we will make it up on volume.”

          Post-Bankruptcy: “Mam… we are hemorrhaging market share” ” Have no fear, we will just keep shuttering factories, platforms and continue layoffs.” “Cutting costs is easier than boosting profitable sales.”

          • 0 avatar
            PrincipalDan

            @CaddyDaddy – Like whenever GM cancels a vehicle a brand or abandons a market segment they always say: “Those customers will stay loyal they’ll just buy X instead.” And largely those customers go to another brand never to darken GMs doorstep again.

          • 0 avatar
            Vulpine

            @PD: “Like whenever GM cancels a vehicle a brand or abandons a market segment they always say: “Those customers will stay loyal they’ll just buy X instead.” And largely those customers go to another brand never to darken GMs doorstep again.”

            — Sounds a lot like Ford when they dropped the Ranger, doesn’t it. Fully half those Ranger customers went to Toyota instead.

          • 0 avatar
            DenverMike

            @Vulpine – It’s always a salvage operation, when canceling a model or brand. At the time, canceling the Ranger made sense. Right before that, the Dakota and Raider were canceled, followed by the Colorado/Canyon a short time afterwards.

            The midsize pickup market had been shrinking for years and it was time for many automakers to pull up the tents. THere wasn’t room for everyone. Something like 25% of displaced Ranger buyers did step up to a new F-150, 13% bought a Transit Connect, and a few % bought other Fords, if I remember correct.

            It’s not an exact science since not all displaced Ranger buyers (when buying other Fords) will report the Ranger would’ve been their first choice.

          • 0 avatar
            Vulpine

            @DM: As is quite obvious, cancelling the Ranger made no sense at all; Ford sacrificed customers who, as yet, have not come back with the new Ranger release. FCA followed Ford’s path and they, too, lost customers. Only FCA’s efforts with Jeep and their newest version of the RAM has brought them ahead. Chevy, meanwhile, only took a short break to bring out a new version and never totally abandoned the mid-sized market.

            Of course, you’ve been wrong for so long that you can’t even remember why mid-sized trucks became popular in the first place.

          • 0 avatar
            DenverMike

            It doesn’t appear Ford is much interested in bringing back past Ranger buyers.

            If you haven’t noticed Rangers are somewhat shockingly, priced higher than similar trim F-150s, depending on how you option them, and of course Rangers will be comparatively thin on rebates.

            There’s pros and cons to every decision, similar to canceling car lines. It’ll take time to reel in new or old Ranger buyers. But either way, Ranger buyers, for the next coming years may be currently Tacoma, or they may not be in a pickup at all.

            The largest Ranger buyer was Orkin and Ford likely prefers losing them permanently, along with past Ranger fleet-buyers, other cheapskates and bottomfeeders.

            Not all buyers are created equal, and Ford is clearly wanting to take the Ranger to a new level of profitability. Or why go to the trouble?

            The “concept” or strategy of providing entry level, loss leaders for the sake of future profitable (repeat) sales, is obsolete.

            But there’s no telling how low Toyota bid to get the Orkin contract. Toyota is a bigger fan of fleet sales than they’ll ever admit. They obviously underbid Nissan.

      • 0 avatar
        Steve203

        “Can you think of any other aspect in life where average people are so willing to give away SOOOO much money for nothing than when purchasing a Pickup truck? ”

        Yup, car based SUVs. Automakers charge thousands more for an SUV than a passenger car with the same features, built on the same platform. Doesn’t matter if they put a couple thousand in incentives on the SUV, because the transaction price will still be significantly higher than the passenger car, for, essentially, the same vehicle.

  • avatar
    CoastieLenn

    Unfortunately for GM, their design language on this new truck that they’re so dependent on is not playing out well in their favor. The previous model (post refresh) was arguably the best looking GM design in decades… then they follow it up with this. Shame.

    • 0 avatar
      Robotdawn

      Gah, are you kidding?? Those square wheel arches are hideous! From the side they look continuously surprised. I own a 2016 Sierra and that’s the single complaint I have.
      I like the new GM trucks. It’ll be some time before I’m truly in the market for one, but they did a nice job with everything except the back. Something is weird there, it looks disjointed. Although now that I’ve noticed it on the GM trucks, the Fords looks odd too. It’s probably the bed height not being proportional (to my eyes).

  • avatar
    gomez

    I predict an emergency “refresh” of the Silverado’s exterior and interior by early next year. GM really screwed the pooch on the new design. Hopefully the interior gets updated before the new Suburban and Tahoe launch.

    • 0 avatar
      1500cc

      Early next year would be a little quick, but hopefully they’re fast tracking the mid-cycle refresh.

      It astounds me that GM came up short on so many aspects of this refresh, that really were avoidable if they had’ve spent the cash. Given that they probably have a sizable cost advantage vs. Ford (less expensive steel bodies, less expensive OHV V6 and V8 engines), they should have plowed some of that money into making a knock-out interior, better ride, and 10-speeds for everyone.

      • 0 avatar
        gomez

        Quick, but not unheard of in the industry. Honda did an emergency refresh of the last-gen Civic after one model year after reviews were lackluster (even though that wasn’t necessarily reflected in sales numbers). If sales continue to decline, GM will be forced to throw money at the problem to fix it ASAP.

        I think GM was complacent with this design. They were never going to overthrow Ford in sales and never thought FCA would come up with anything like the new Ram (understandable given how little investment put into other FCA US brands outside of Jeep). What GM failed to realize is that FCA is even more dependent on their trucks than they are, so they were willing to throw money at it.

      • 0 avatar
        johnds

        I hope they can at least come out with a upscale interior. Maybe they can use the old interior for the work truck.

    • 0 avatar
      EquipmentJunkie

      I agree with you, gomez. It isn’t easy to hit a moving target of customer preferences on a major product overhaul. GM knew how big the stakes were and probably erred on the side of caution given the unit volume and profit potential of trucks. As a result, GM has an ’06 Civic situation on their hands. Honda expected the customer to want less content in the new Civic and guessed wrong. The press was fairly harsh on the ’06 Civic and Honda got to work on a redo for ’08 even though the Civic’s deficiency wasn’t evident in sales numbers.

      I’m sure the midnight oil is currently being burned at GM on a truck “refresh”.

    • 0 avatar
      SSJeep

      I dont mind the new Silverado exterior design. It is not offensive, but it is not striking either. The Silverado interior, however, is terrible and needs an emergency refresh, like yesterday.

  • avatar
    Detroit-X

    Stay tuned. “Sales” is just shipment to dealers, who haven’t sold them yet.

    • 0 avatar
      highdesertcat

      That’s correct. But what I find disturbing is the sheer number of 2018 Silverado trucks still on the dealer lot in addition to the 2019 floorplan Silverados.

      Considering that an unsold 2018 Silverado is worth roughly 66% of MSRP wholesale, the cash on the hood offered is not enough for most people to scoop last year’s model off the market.

    • 0 avatar
      danio3834

      No, that’s incorrect. “Sales” reported are New Vehicle Delivery Reports which means a vehicle sold at the dealer level to a customer. In some cases the “customer” is the dealer’s loaner fleet, but still a new vehicle sold and becoming a used car.

  • avatar
    rpol35

    If GM continues to lose market share at this alarming a rate, they’ll lose critical mass, won’t be able to carry their extensive overhead and end up ripe for a takeover.

    GM has had some bone-headed leadership in their vast past but I’m not too enthralled with their current CEO either.

    • 0 avatar
      Detroit-X

      In the last 15y, I think stock market and competitor sentiment is that the only value in GM are the hard assets. “Can we build a motel on site X?”

    • 0 avatar
      Steve203

      “GM has had some bone-headed leadership in their vast past but I’m not too enthralled with their current CEO either.”

      Mary has spent her entire career in the GM echo chamber. She receives a lot of positive press because of her gender, but is she better at running the company than Roger Smith? I submit that she isn’t.

      GM continues to bleed market share. They close plants because not only are the models the plants build not selling in sustainable numbers, GM doesn’t have anything in demand enough to fill the plants.

      As with Ford and FCA, the race is on to show Wall St ever higher transaction prices, like that $5800 bump in the Silverado. The easy way to increase the average transaction price is to discontinue the low priced models, like the Cruze, Focus and Fiesta. Get rid of the sub-$20,000 product and the average automatically goes up with no development, no investment and no risk.

      • 0 avatar
        jack4x

        “The easy way to increase the average transaction price is to discontinue the low priced models, like the Cruze, Focus and Fiesta.”

        Bugattis for everyone!

      • 0 avatar
        PSX 5k Ultra Platinum Triple Black

        Steve203, that is awfully harsh to say she is just as bad as Roger Smith was. He pretty much destroyed everything that was still maybe good about GM when he did his reorganization in the 80’s. He took away all the uniqueness of the brands Sloan created when he and combined the divisions engineering departments and made them share almost all exterior body panels which made the cars look indistinguishable from another. Plus all of the money he wasted on automation and Saturn.

        Yet, she is sucking it up with the new Silverado. It looks terrible, and the interior is even worse, and a new 4 cylinder turbo? Gross. Nothing that has came out recently is a home run, or even desirable. GM does know how to engineer the numbers for Wall Street, which is what CEO’s are paid on, but it sounds like the everyone is already wise to the game GM is playing.

        I hope Mary can turn GM around (for her sake), but the odds aren’t good from the culture and horrible decisions made by her predecessors.

        I hope GM makes it to save all the employee and supplier and dealership jobs.

        I think GM will continue to shrink faster than ever before because they suck worse than ever before.

      • 0 avatar
        danio3834

        The ATP push is a necessity in order to get customers to pay for CAFE compliance tech. It’s no coincidence that the SAE said that the new CAFE regs would add ~$5k in cost per vehicle. Low margin cars are now negative margin cars, so they don’t get to stick around.

        Pleasing Wall St. is a side benefit, the real goal is just to stay in business.

        • 0 avatar
          Steve203

          “The ATP push is a necessity in order to get customers to pay for CAFE compliance tech.”

          The big three have been spinning that sort of thinking for years. I remember when John Ricardo went to DC saying Chrysler’s problems were all the government’s fault, because the safety and emissions regs leaned heavier on Chrysler because the company was smaller, therefore, the government should give Chrysler $1B. Of course, Ricardo’s screed ignored the fact that the import brands were complying with the same regs, on an even smaller market share.

          Under the old CAFE structure, tightened fuel economy regs could be easily met by downsizing the vehicles. It’s the “reformed” CAFE system that was enacted a dozen years ago, which was designed to offer easier compliance to larger vehicles over small and trucks over cars, that cut off the downsizing route as an option. Who would have been lobbying Congress to enact a reg that would favor larger, more expensive, vehicles, over smaller, cheaper, ones?

          This big car, big profit, vs small car, small profit, argument has raged for years. Henry Ford’s financial backers were pushing him to build big, expensive, cars, because they were more profitable. Ford wanted to built small, cheap, cars at low margin, and sell millions of them. Ford became fantastically rich, building small, cheap, cars.

          In the late 50s, the big three’s products became steadily bigger and more garish. Rambler ate their lunch, forcing the big three to introduce their own small, cheap, cars.

          The big three today, want to build the same sort of cars they have wanted to build for decades, big, expensive ones, because they are more profitable. They now have a pliable government that writes legislation to favor the sort of vehicles they want to build. When anyone points out that, in spite of unprecedented long lending terms, more people are being priced out of the new car market, the big three says “let them buy used”. The GM result is their desired outcome: higher profit, volume doesn’t matter.

  • avatar
    Vulpine

    Clearly, GM needs to stop building crossovers and only build sports cars and pickup trucks–in every size.

  • avatar
    ajla

    If you aren’t planning to keep it for over 7 years, I really like that new GMC multi-function tailgate.

  • avatar
    eggsalad

    The “personal use” pickup truck market is a dying black hole that will soon collapse on itself. That’s my prediction and I’m sticking to it.

    • 0 avatar
      SSJeep

      … and you would be wrong. As long as a buyer can get a mid-trim pickup for the price of a loaded Camry after discounts, pickup trucks will keep selling like hotcakes.

    • 0 avatar
      Vulpine

      If they introduce at least one smaller size, the market will expand again… especially if it is small enough to be truly called ‘compact’.

  • avatar
    dusterdude

    Nobody is talking about GM shutting down plants having an effect… Don’t you think those events removed some of their goodwill with consumers? I know people have short memories and many will forget next year, but the closing of GM plants is still topical…

    • 0 avatar
      gomez

      Maybe to some people, but the buying public generally doesn’t know or care where their vehicle is made (look at the Buick Envision). Sure, they may say that they do, but the buying patterns would say otherwise. People just want what they want.

  • avatar
    Dilrod

    I finally figured out something about the new Chevy truck appearance.

    You remember that kid in high school who liked to draw cars in his notebook? He was pretty good, but not that good.

    I think he’s the guy who designed that truck.

  • avatar
    65corvair

    GM, giving up market share isn’t sustainable, I don’t care how good your profits were last quarter. You lost money in Europe for decades, yet PSA shows a profit in a year. I think ALL of the upper management needs to go, and just hire the PSA people who took over your European brands.

    • 0 avatar
      gomez

      PSA showed a profit on Opel after a year of major cost cutting and contract renegotiation. Since the French government is one of the largest shareholders in PSA (13.68%), they were given a lot more latitude by the EU to make cuts than GM ever had. PSA has yet to demonstrate whether the outcomes of all this is sustainable long-term.

  • avatar
    CKNSLS Sierra SLT

    I bought a new 2018 Silverado Crew Cab LTZ (4WD-Bose, Leather, etc.) for $43,000.00 (sticker $54,000.00)

    I traded in a 2012 GMC Sierra SLT (equipped the same). After a little teeth pulling (by me) the dealer gave me $25,000.00

    So yea-once you have a truck the “trading up” is easier.

    Couldn’t get to the dealer fast enough after I saw the redesign of the 2019s-to buy the 2018.

    As a matter of fact-I’m predicting a redesign of the new model front end soon…….

    • 0 avatar
      PrincipalDan

      My Father-in-law wrecked his 1st gen Canyon about a year ago. It was a standard cab, base (crank windows even), 4 cyl, automatic 4×2, long bed. Well over 100,000 miles on it.

      You could have knocked me over with a feather when the insurance company gave him $6500 to total it out. I would have figured that POS was worth $2500.

  • avatar
    Jeff S

    I am with Vulpine let’s see a true compact pickup especially one that you don’t have to get on a ladder to reach in the bed. Maybe Hyundai or Mitsubishi. Wouldn’t mind having another Mighty Max especially if it were priced lower, rubber floors, 6 speed manual, and crank windows.

  • avatar
    DenverMike

    There’s no real improvement with every generation of GM pickups and the cost cutting, cheapness and Chinese content shows. Just compare them to the others. In fact the past three “generations” may be the same old trucks, just a complete re-skin and renaming the platform.

    Their low hanging (diesel) “DEF tanks” give it way. They were an afterthought when emissions required them, and that’s fine, but that was 10+ years ago, and they still haven’t incorporated them into the truck.

    I can’t feel sorry for GM. Fullsize pickups (and fullsize SUVs) should be their main priority, goes without saying.

    • 0 avatar
      gtem

      “There’s no real improvement with every generation of GM pickups and the cost cutting, cheapness and Chinese content shows”

      Sums it up nicely. And this is from a guy that absolutely adores GMT400 Chevies.


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