The following article is part of the GM Authority Opinion Desk series, where our authors share what is on their minds.
Sales of General Motors’ full-size pickup trucks — the Chevrolet Silverado and GMC Sierra — grew 6.65 percent in the first nine months of 2014. Specifically, the Silverado grew 5.93 percent to 382,153 units, while the Sierra grew 8.56 percent to 147,298 units. And while those are both great results, what might not be so favorable is the fact that only one of those actually grew in market share — the GMC Sierra.
Yup, market share of Big Red’s big truck reached 9.79 percent, up 0.18 percent on a year-over-year (January-September) basis. The Silverado’s share actually dropped 0.14 percent to 25.39 percent. Both figures are rather disappointing given that both trucks are all-new for the 2014 model year. By comparison, the big winner when it comes to market share is the (Dodge) Ram, which posted a 2.65 percent year-over-year increase, while Ford’s F-Series declined 2.59 percent in the midst of the automaker retooling its plants for the next-generation, aluminum-bodied truck.
January 2014 - September 2014 YTD 2014 Pickup Truck Sales
|MAKE & MODEL||JANUARY - SEPTEMBER 2014 SALES VOLUME||JANUARY - SEPTEMBER 2013 SALES VOLUME||JAN-SEP 14/JAN-SEP 13 SALES VOLUME +/-||JANUARY - SEPTEMBER 2014 MARKET SHARE||JANUARY - SEPTEMBER 2013 MARKET SHARE||JAN - SEP 14/JAN-SEP 13 MKT SHARE +/-|
|TOTAL FULL-SIZE PICKUPS||1,504,912||1,412,802||6.52%||100%||100%||0.00%|
Given these numbers, it’s difficult not to wonder about what could be wrong with GM’s trucks or their go-to-market strategy.
But consider this: in September 2014, GM’s incentive spending as a percentage of Average Transaction Prices (ATPs) was 11.1 percent. That’s a 0.2 percentage point increase from August 2014, but the lowest of all domestic automakers by a wide margin. What’s more, GM’s calendar-year-to-date spending as a percentage of ATPs is 10.7 percent, down 0.3 points. Meanwhile, industry spending is 10.0 percent, up 0.4 points. In other words, the industry is outspending GM when it comes to transaction-sapping incentives. GM’s approach tends to increase per-unit profits, but stifles market share growth, which is purely a game of sales volume.
And therein lies the danger of GM’s strategy: it drives profits, but gives pickup truck buyers the ability to sample and purchase a competitor’s truck. And in this case, the competitor to watch is obviously Ram, which has been loading its trucks up with sky-high incentives, ones that are significantly higher than those offered by GM on Silverados and Sierras. Ram’s strategy, by comparison, seems to have a laser focus on market share at the expense of per-unit profitability.
product pusher marketing professional knows the inherent risk and associated problems with letting customers slip away. The biggest peril revolves around the difficulty of bringing a “lost” customer back to the brand from which they switched. Not only is doing this much more expensive than simply keeping (retaining) the customer, but it is also significantly more difficult, as the customer is now breathing and living the product, not to mention being aligned with the brand that they switched to. And persuading truck customers (as opposed to car and crossover buyers) to switch is an especially difficult endeavor. Like trying to get Michigan football fan to suddenly root for Michigan State.
In the long run, GM will probably significantly change its go-to-market strategy after Ford finishes retooling its plants and launches its all-new 2015 F-150. But with so many Chevy and GMC truck buyers now in Ram pickups, one has to wonder if The General should have offered more incentives sooner, a move that most likely would have prevented Dodge from posting double-digit growth figures to begin with.
As one GM dealer put it: “Now, we’ll have a hell of a time getting those customers back into a Silverado or Sierra.”