Skip to comments.Are Truck Buyers Avoiding GM Because of Bailout?
Posted on 10/07/2013 9:07:10 AM PDT by jazusamo
Chevy Silverado: "Strong" Commercial | Chevrolet 1:03 minute
One of the most disappointing aspects of last week's sales results from General Motors was the underperformance of the much-hyped new truck offerings from the company. While the industry-leading Ford F-Series saw sales increase about 10 percent to around 60,500 vehicles for the month, GM's combined sales for its competing Chevy Silverado and GMC Sierra fell approximately 8 percent to about 46,000 units.
GM's Obama-appointed management's performance in trying to explain the declining sales was as lame as the sales results. Amongst the excuses for disappointing truck sales, GM did not include the possibility that a hangover from the auto bailout is contributing to the dip and to many consumers GM still stands for "Government Motors."
Demographically, truck buyers are older, less urban and more politically conservative than other consumers, just the kind of people who are responsible for all the internet postings along the lines of, "I'll never buy another Chevy..." In fact, GM's latest "Strong" ad is clearly calculated to appeal to this demographic. The targeted audience did not respond favorably, as evidenced by the sales figures. GM's spokespeople tripped over themselves trying to explain why.
GM tried to get ahead off what could be viewed as a problem on Wall Street with truck sales, which is considered the most profitable segment of the auto industry. Management went the easy route by resorting to the old Chevy Volt standby; that darned supply just can't keep up with all this demand! Before the sales figures were even reported, the Detroit News gave excuses for the impending underperformance of GM's truck division with an article entitled, " Demand for Most Popular GM Trucks Reportedly Outstripping Supply."
The piece quotes a GM spokesman who offered this hazy harbinger of the bad news to come:
Dealers always want more of the "hot new truck," said Terry Rhadigan, a GM spokesman. "It's a temporary thing." A dealer ordering 10 of the 5.3-liter pickups is getting eight of them, he said. "It's almost an oxymoron to call it a constraint at 80 percent."
It would also appear to be an oxymoron to say that we have an honest asssesment from a credible GM source. The initial convoluted explanation pointed to "a supplier's ability to produce certain drivetrain parts" for the 5.3 liter V8 motor used in some of GM's trucks. GM sources "declined to identify the supplier." As with the Chevy Volt supply constraint excuse , this one doesn't hold water.
GM backpedaled on its alibi, as mentioned in USA Today . This piece blows holes in the supply constraint theory by quoting, "The V-8 shortage 'is nothing that is affecting sales right now,' says Don Johnson, Chevrolet sales head." I'm glad we got to the bottom of that!
So just what is behind the disconcerting sales drop for GM trucks? Maybe Bloomberg Businessweek can come up with a better one from GM's media-manipulating arsenal. Here's a clip from the Businessweek article addressing the issue:
These models are brand-new-ostensibly the cutting edge of truck technology-and customers still aren't clamoring to buy them. Ford, meanwhile, sold 10 percent more of its F-Series trucks in September. GM is in big trouble if people are kicking its trucks' tires and deciding to go with slightly more dated models made by other companies.
That's not the case, though-at least that's what GM executives were saying Tuesday. Some buyers are choosing competing trucks, but only because the company is torqueing up its profit margins, they said. GM's average transaction price per truck was up about $3,000 from a year earlier and $800 since August.
"No one was close to us from an incentive reduction standpoint and a [price] increase standpoint," says Kurt McNeil, vice president of U.S. sales. "We definitely took a different tack."
That explains it! GM is just making so much darn more money than competitors when it comes to selling trucks! How credible is a company that would cut $5000 from the price of cars like the money-losing Chevy Volt but says that it will not sacrifice profitability for volume on the most important segment of its sales? No need to worry, though. The pricing strategy for GM trucks apparently only lasted the day as new incentives have been offered.
Trucktrend.com reported on the new incentives but was sure to add to their title that GM "Claims Incentives Part of Sales Plan, Not in Response to Competitors." Not in response to competitors? Shouldn't part of a sales plan be to respond to competitors?
GM is also ramping up discounts to its employees, retirees and friends and family of employees. From Automotive News, "GM also permanently expanded the program to include aunts, uncles, nieces and nephews in addition to spouses, parents, children and siblings. Previously, GM offered discounts to extended family only occasionally, and on a month-to-month basis." This move reeks of desperation as GM is pulling out all the stops to revive sales momentum.
My guess is that the employee pricing program does not show up in incentive spending, so GM can deceptively brag about how incentive spending is being held in check while it discounts its vehicles through other means. Perhaps they will also revive the dealership " stair-step" program to prop up sales without having to divulge how much money is being discounted .
GM will now have to get truck sales back on track, despite the cost to profitability, or face harsh criticism from even those analysts who continue to be lenient on the company's shortcomings. No excuse for poor truck sales will continue to be accepted. If supply for V8s was limited, why did they advertise the heck out of trucks that were supposedly unavailable? Does anyone actually believe that Ford is selling trucks at a loss while GM is making so much more on each unit sold?
The more likely, simple truth might be a little more unnerving for shareholders of GM. That is that competitors can afford to make vehicles that are equal or superior to GM at prices that are lower. Like the government that bailed them out and appointed the management, this is a company that still is not run like an efficient free-market corporation with a goal of profitability over appearance. As GM utilizes a political-campaign style playbook to cover up any perception of weakness with excuses, blame and smoke and mirrors, there may be yet another unspoken reason for lagging truck sales. Many consumers have not forgotten the auto bailout.
Mark Modica is an NLPC Associate Fellow.
I drive a GMC right now. Had it before the bailout and have always driven GM, but I’m not buying another one. I plan to buy something made in the USA with US sourced parts - like a Toyota Tundra.
I won’t buy another GM product & I have 2 right now.
I will continue to repair them & rebuild engines until I die.
Any dairy farmer dumb enough to let a milk cow roam in the wilderness and interbreed with longhorns is a prime candidate to buy a GM truck.
My normally apolitical husband traded in his GMC Acadia last January. He refused to get another even though he liked it. It was the bailout that did it for him
I will never buy another GM product. I will continue to cut up my GM Visa card every time they send me a new one.
We love our Nissan Titan and Honda Ridgeline. Perfect for work, travel, hauling, and three kids. I’ll never buy a GM or Chrysler.
I’ve sworn off Government Motors. They allowed Barak A%%hole Obama to essentially fire the president of the company (Rick Wagoner) and perform a hostile takeover. They are dead to me.
Had I been Wagoner I’d have told that forked tongued, demon infested, commie rat 0-bastard to march into the ocean, and then filed for bankruptcy.
Speaking personally I can say that I bought GM products my whole life but when I bought my new truck it was a Ford and I’ll never buy GM again.
I used to be a GM car and Dodge truck man.
I will NEVER buy another GM vehicle - PERIOD! And I am still skiddish about looking at the Dodges.
The company I work for has been in business since 1996 (actually 16 companies (each with at least 35 years of experience) banded together in 1996) and has ALWAYS had GM trucks. In 2009, we canceled our company fleet contract and we are slowly replacing ALL of our trucks, vans and SUVs with Fords!
I never was a Ford man, but the 2010 Ford F150 Crew Cab that I have is AWESOME! Liked it so much, when we were looking for a large SUV, we purchased a used Excursion! First Ford I have ever owned!
We are looking to purchase a new car for my 20 y/o daughter and we are only looking at Fords and foreign (American assembled) cars!!
My 2003 GMC Envoy Denali is the LAST GM product I will ever buy. Ford, Honda and Toyota are the only brands I will look at.
Would that be your brother's husband?
likewise - my 99 tahoe is a champ - I’ll never buy new again
My sisters husband
SO, you think Kia Souls are ghey?
GM sponsors the new test track pavillion at disneyworld. It is a fine example of 1990 computer graphics.
Not necessarily. Just saw the opening for a joke. :)
Well, okay, maybe a little light in the loafers.
This is how much GM knows about people who buy trucks...cattle at the start of the commercial are long horns...the rancher is carrying a Holstein calf at the end of the commercial. http://www.youtube.com/watch?v=pPgEBRAgcIQ
That’s almost as funny as that penis pill commercial where the rancher gets his 4wd Dodge truck stuck in a teeny little mudhole in the road and instead of just engaging 4wd and continuing he gets the horses out of the trailer and uses them to drag his sorry ass out of the mud... “you’re old , you’ve learned not to let problems stop you ...”
I got a ‘98 Silverado, and a ‘94 Pontiac. Been driving GM since I first got my license in ‘75.
Government Motors has lost my business. My next auto or truck (I’ve already decided my next bike - Yamaha) will either be Ford, or perhaps a Toy. At least the Toy is made in the US in right to work states.
You can’t even get a manual tranny in full sized pickups, it’s NOT OFFERED. The world has become very strange place.
Leave us not forget The Regime’s response when Ford had the temerity to remind folks that it wasn’t a participant in the shake down/bail out.
Sep 28 2011 (from Moonbattery)
Ford Caves to Obama Regime
The unscripted Ford ad in which a customer
explains that he bought a Ford because the
company did not allow itself to be bought out by
Big Government has been pulled under
pressure by the same administration that has
seized control of its competitors:
With President Barack Obama tuning his re-
election campaign amid dismal economic
conditions and simmering antipathy toward
his stimulus spending and associated
bailouts, the Ford ad carried the makings of
a political liability when Team Obama can
least afford yet another one. Cant have
The ad, pulled in response to White House
questions [i.e., pressure] (and, presumably,
carping from rival GM), threatened to
rekindle the negative (if accurate)
association just when the president wants
credit for their positive results (GM and
Chrysler are moving forward, making
money and selling vehicles) and to distance
himself from any public downside of his
I know that three and a half years ago, when my 2006 GMC Canyon was totaled and I had to unexpectedly buy a new vehicle, I avoided Dodge, Chrysler, GMC and Chevrolet products. I know that now that my wife’s Kia minivan is 9 years old and in need of replacing we’re looking at anything but a Dodge, Chrysler, GMC or Chevrolet product.
Take that as you will.
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