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

Steph Willems
by Steph Willems

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]

Steph Willems
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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.

  • Dartdude Having the queen of nothing as the head of Dodge is a recipe for disaster. She hasn't done anything with Chrysler for 4 years, May as well fold up Chrysler and Dodge.
  • Pau65792686 I think there is a need for more sedans. Some people would rather drive a car over SUV’s or CUV’s. If Honda and Toyota can do it why not American brands. We need more affordable sedans.
  • Tassos Obsolete relic is NOT a used car.It might have attracted some buyers in ITS DAY, 1985, 40 years ago, but NOT today, unless you are a damned fool.
  • Stan Reither Jr. Part throttle efficiency was mentioned earlier in a postThis type of reciprocating engine opens the door to achieve(slightly) variable stroke which would provide variable mechanical compression ratio adjustments for high vacuum (light load) or boost(power) conditions IMO
  • Joe65688619 Keep in mind some of these suppliers are not just supplying parts, but assembled components (easy example is transmissions). But there are far more, and the more they are electronically connected and integrated with rest of the platform the more complex to design, engineer, and manufacture. Most contract manufacturers don't make a lot of money in the design and engineering space because their customers to that. Commodity components can be sourced anywhere, but there are only a handful of contract manufacturers (usually diversified companies that build all kinds of stuff for other brands) can engineer and build the more complex components, especially with electronics. Every single new car I've purchased in the last few years has had some sort of electronic component issue: Infinti (battery drain caused by software bug and poorly grounded wires), Acura (radio hiss, pops, burps, dash and infotainment screens occasionally throw errors and the ignition must be killed to reboot them, voice nav, whether using the car's system or CarPlay can't seem to make up its mind as to which speakers to use and how loud, even using the same app on the same trip - I almost jumped in my seat once), GMC drivetrain EMF causing a whine in the speakers that even when "off" that phased with engine RPM), Nissan (didn't have issues until 120K miles, but occassionally blew fuses for interior components - likely not a manufacturing defect other than a short developed somewhere, but on a high-mileage car that was mechanically sound was too expensive to fix (a lot of trial and error and tracing connections = labor costs). What I suspect will happen is that only the largest commodity suppliers that can really leverage their supply chain will remain, and for the more complex components (think bumper assemblies or the electronics for them supporting all kinds of sensors) will likley consolidate to a handful of manufacturers who may eventually specialize in what they produce. This is part of the reason why seemingly minor crashes cost so much - an auto brand does nst have the parts on hand to replace an integrated sensor , nor the expertice as they never built them, but bought them). And their suppliers, in attempt to cut costs, build them in way that is cheap to manufacture (not necessarily poorly bulit) but difficult to replace without swapping entire assemblies or units).I've love to see an article on repair costs and how those are impacting insurance rates. You almost need gap insurance now because of how quickly cars depreciate yet remain expensive to fix (orders more to originally build, in some cases). No way I would buy a CyberTruck - don't want one, but if I did, this would stop me. And it's not just EVs.
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