GM: Pickup Profit Is Paramount, but Expect a Sales Rebound

Steph Willems
by Steph Willems
gm pickup profit is paramount but expect a sales rebound

Unlike the botched launch of Ram’s new-for-2019 1500 pickup, General Motors from the very outset planned to release its equally new full-size trucks in dribs and drabs. Sales have taken a hit as the automaker focused first on lucrative crew cab models, recently boosting production of the popular bodystyle, as well as that of the arguably more attractive High Country trim. Next comes regular and double cabs, while the polarizing, new-for-2020 Heavy Duty models just went on sale.

As headlines shout about GM’s shrunken truck market share, the automaker claims profits from its revamped models are just fine. Sales will follow — just you wait, GM says.

In discussing the automaker’s healthy second-quarter earnings late last week, GM Chief Financial Officer Dhivya Suryadevara commented, “You’re really starting to see the earnings potential of our truck franchise.”

The company’s key North American business saw a 10.7-percent profit margin in the past quarter, with Suryadevara giving partial credit to the revamped Chevrolet Silverado and GMC Sierra lines, both of which boast significant increases in average selling price over the previous models. Sales themselves are something of a mystery, as the automaker (joined by Ford and Fiat Chrysler) no longer issues monthly reports. Through the first half of the year, Silverado sales dropped 11.8 percent; the Sierra nameplate fell 3.4 percent. Over the same period, Ram sales soared 28 percent, bolstered by the new HD and the continuation of the previous-gen 1500 “Classic.”

As reported by Automotive News, Suryadevara told shareholders, “We had a deliberate strategy that our launch would be cadenced. It was a strategy that was rolled out on purpose, and it’s working.”

Still, falling to third place behind Ford and Fiat Chrysler is not an enviable situation. It raises concerns that the now second-place Ram brand may have received a lasting boost from GM’s slow roll-out — at least according to Edmunds analyst Jessica Caldwell. “There has to be some concern somewhere,” she said of the mindset in GM’s C-suite.

“You could have a deliberate launch strategy, but if your direct competition is gaining share, that’s a threat to your business.”

FCA CEO Mike Manley was eager to state that the Ram brand has seen its full-size pickup market share rise 7 points in the past year — data that no doubt stings a few GM execs, recent profits notwithstanding.

Speaking of earnings, Suryadevara forecasts a healthier balance sheet in the second half of the year, linking the company’s fiscal performance with a predicted sales boost for the full line of Silverado and Sierra trucks.

[Images: General Motors]

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  • Oldschool Oldschool on Aug 06, 2019

    Ok, so Mexicans are being paid fair wages considering their cost of living is lower, but I am sure they don’t have the same kind of benefits like U.S employees do. What is sickening, is how much money GM is making off per truck sold off the backs of $5.00 an hour wages or however much they pay them. The profit margins must be massive! Unless people protest and refuse to buy a Mexican made truck, they will continue to make hand over fist profits. What is sad is how the D3 has slowly become a Truck/SUV company more than anything. Sure people aren’t buying cars as much anymore, but there’s still a portion of society that just wants a smallish reliable sedan that gets great gas mileage and can fit into modern day parking spaces. We’ll see how the rest of year pans out, but personally I would never buy a Mexican made or China made vehicle. Only U.S. Japanese , German, and Canadian built vehicles for me.

    • TheDumbGuy TheDumbGuy on Aug 06, 2019

      Oldschool- I understand your points, but your arguments would be more believable if you included more specifics, ie: wages of Mexican workers, vs "$5.00 an hour wages or however much they pay them". That number may be wildly inaccurate, for all we know. And language like "how much money GM is making off per truck sold off the backs of [Mexican workers]" sounds anti-free market and class envy-like talk to me. And expecting "people [to] protest and refuse to buy a Mexican made truck," ? People either buy a truck or don't- they don't go home and paint up some signs and come back to the dealer's to picket. Unless they are maybe democrat/socialists, that is. As far as buying a Mexican or Chinese vehicle, I agree with you.

  • Akear Akear on Aug 06, 2019

    How can GM produce a few splendid vehicles like the CTS6-V, Corvette, and Camaro, and then give us garbage like its current large trucks.

  • Bobbysirhan The Pulitzer Center that collaborated with PBS in 'reporting' this story is behind the 1619 Project.
  • Bobbysirhan Engines are important.
  • Hunter Ah California. They've been praying for water for years, and now that it's here they don't know what to do with it.
  • FreedMike I think this illustrates a bit of Truth About PHEVs: it's hard to see where they "fit." On paper, they make sense because they're the "best of both worlds." Yes, if you commute 20-30 miles a day, you can generally make it on electric power only, and yes, if you're on a 500-mile road trip, you don't have to worry about range. But what percentage of buyers has a 20-mile commute, or takes 500-mile road trips? Meanwhile, PHEVs are more expensive than hybrids, and generally don't offer the performance of a BEV (though the RAV4 PHEV is a first class sleeper). Seems this propulsion type "works" for a fairly narrow slice of buyers, which explains why PHEV sales haven't been all that great. Speaking for my own situation only, assuming I had a place to plug in every night, and wanted something that ran on as little gas as possible, I'd just "go electric" - I'm a speed nut, and when it comes to going fast, EVs are awfully hard to beat. If I was into hypermiling, I'd just go with a hybrid. Of course, your situation might vary, and if a PHEV fits it, then by all means, buy one. But the market failure of PHEVs tells me they don't really fit a lot of buyers' situations. Perhaps that will change as charging infrastructure gets built out, but I just don't see a lot of growth in PHEVs.
  • Kwik_Shift Thank you for this. I always wanted get involved with racing, but nothing happening locally.