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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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.
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.