The Inside Scoop On Why GM Discontinued The Chevy Avalanche
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April 2012 will forever go down in history as a particularly sad month for Chevy Avalanche owners, fans and enthusiasts. That was the month that General Motors announced plans to discontinue the Avalanche, a truck loved by owners far and wide, many of whom praised it as the perfect truck. That made GM’s decision to abruptly discontinue the vehicle puzzling, if not completely bizarre. Since then, it was universally assumed that the discontinuation was caused by low sales volume, which is partially true. But it’s far from the whole story.
We recently had the good fortune of speaking to someone who was part of the decision to discontinue the Avalanche program, enabling us to get the complete picture.
The Strategy
As our source tells us, GM’s strategy for the Chevy Avalanche program involved generating increased utilization of GM’s GMT800 (for the first-generation) and GMT900 (second-generation) platforms that were used by the automaker’s full-size SUVs (Tahoe, Suburban, Yukon, Escalade) and pickup trucks (Silverado, Sierra), while also generating higher pricing power than the Silverado – which at the time was capped at the LTZ trim level and didn’t command the ATPs it does today. The business plan involved generating healthy sales volume and even healthier transaction prices from the Avalanche and its platform mate – the Cadillac Escalade EXT.
In fact, we were told that the Avalanche program was projected to carry about the same profit potential as the Silverado on a per-unit basis thanks to its price-positioning power.
The Sales
So, let’s have a look at those sales figures that are often cited as the reason for the Ave’s demise.
Sales started off strong in 2001 with 52,955 deliveries. The truck posted its best sales year in 2003, selling 93,482 units. But by 2011, the year prior to GM’s decision to discontinue the vehicle, Chevy Avalanche sales dwindled to a measly 20,088 units.
| Calendar Year | Avalanche Sales | Silverado Sales | Avalanche To Silverado Ratio |
|---|---|---|---|
| 2001 | 52,955 | 716,051 | 7% |
| 2002 | 89,372 | 652,646 | 14% |
| 2003 | 93,482 | 684,302 | 14% |
| 2004 | 80,566 | 680,768 | 12% |
| 2005 | 63,186 | 705,982 | 9% |
| 2006 | 57,076 | 636,069 | 9% |
| 2007 | 55,550 | 618,259 | 9% |
| 2008 | 35,003 | 465,065 | 8% |
| 2009 | 16,432 | 316,554 | 5% |
| 2010 | 20,515 | 370,135 | 6% |
| 2011 | 20,088 | 415,130 | 5% |
| 2012 | 23,995 | 418,312 | 6% |
| 2013 | 16,986 | 480,414 | 4% |
As such, rumors of GM discontinuing the Avalanche as a result of “poor” or “falling” sales do hold water… but it’s only the tip of the proverbial iceberg.
What (Really) Happened
Almost from its inception, the Avalanche was universally loved by owners for its flexibility, enabled by its distinct midgate and integrated bed. Moreover, the truck consistently delivered overwhelmingly positive ownership satisfaction ratings. Coupled with a solid profit strategy and healthy scale economies (the best available within GM, in fact), the team working on the Ave’s business case thought they had found another gold mine for the automaker that would complement the automaker’s lucrative full-size SUV and pickup truck business.
With excitement rampant, the word “bankruptcy” – which came about 13 years thereafter – was unimaginable. So what went wrong?
At the time that the Avalanche was conceived, GM’s business strategy was driven, first and foremost, by manufacturing efficiencies, rather than true market demand. Due to unfavorable agreements with its labor force, GM’s master plan involved producing more vehicles than were demanded by the market at large, and then selling the overproduced vehicles at steep discounts, rebates and/or other promotions. As our source tells us, the practice “rapidly removed the vast majority of profit from a vehicle line”, while also having other negative secondary consequences, such as eroding brand equity and reducing resale value. But for GM, it was cheaper to keep factories running and producing vehicles that were not selling than to idle a line at a plant for a week, or two, or three.
Notably, the Avalanche was produced at the GM Silao plant in Mexico, which somewhat shielded it from the high costs of temporarily idling a plant. Unfortunately, GM’s “over-produce and over-incentivize to sell” strategy was in full effect across the corporation, and applied to the Avalanche as much as it did to any other product. The approach made the Avalanche less profitable than it really was. We’ll come back to this in a minute.
Then came GM’s 2009 bankruptcy. As managers allocated funds for future vehicle programs in the aftermath, “money was tight, and budgets were even tighter,” says our source. During a meeting associated with the roadmap for GM’s full-size SUV and pickup truck products on the then-upcoming K2 platform, a new-to-GM manager questioned the strategy of fielding two Chevrolet full-size pickup truck offerings – the Silverado and Avalanche. The question seemed pertinent, as it came during a time when “efficiency” was all the rage within the “new GM”, especially following the shuttering of Pontiac and Saturn, and the sale (and eventual shuttering) of Hummer and Saab.
An all-out study was commissioned to determine whether a business case existed to bring to market a third-generation Chevy Avalanche on the upcoming GM K2 platform. The results of that study determined that “all in costs” – those including development, tooling, production, marketing, aftersales support, and more – were higher than the return threshold to make a new Ave. In addition, some GMers felt that a large enough subset of Avalanche owners could be transitioned to the Silverado.
Our source tells us that the study wasn’t entirely accurate, since it relied on Old GM’s data that overproduced and over-incentivized vehicles – factors that made the first- and second-gen Avalanche seem far less lucrative “on paper” than it actually was. So, the new management – gun shy to take any unnecessary risk or create any conflict following a highly-publicized bankruptcy – decided to do away with the Avalanche, referring to the model as a product that “duplicated efforts” (when taking into account the Silverado).
The Irony
The GM we know today is one that has learned to manage profit-sapping incentives extremely well, while exhibiting very respectable levels of discipline. The automaker also doesn’t seem to care much for outright sales volume if it’s not profitable, significantly reducing its reliance on the unprofitable daily rental fleet business while also reaping the benefits of a friendlier cost structure for its manufacturing labor.
Taken as a whole, that means that the Avalanche could have very much been into its third (or fourth) generations had the GM of 2010 had the same freedoms, principles, priorities and general ways of thinking as the one we know today.
Alas, the Chevy Avalanche is not coming back. As far as we know, future GM product plans do not include a revival of a pickup truck with the Ave’s innovative midgate. But we can always dream, right?
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I’ve got a 2011 LT 5.3L ave. I love it.
I have a 02 Z66 with 260k original motor and tranny and 07 with 134k. Love both of them absolutely best vehicles I’ve ever owned.
I have the 2002 Chevrolet Avalanche 150 four door gas and I love I mean love my truck
I have a 2013 Black Diamond LTZ that replaced my 2011 when I heard they were discontinuing it (and I had a 2004). I can’t tell you how many people I’ve met who said, “I had an Avalanche – wish I would have kept it). A silverado doesn’t fit in my garage, nor ride like my avalanche. A suburban or tahoe doesn’t have a bed for hauling dirty stuff, and you cant open up the back window for a near-convertible experience. I have driven to dealerships to buy a new silverado, sierra, suburban, and yukon; each time I left feeling that I wasn’t improving anything. What’s crazy is my trade in value has been going up lately. I actually bought a BMW as a beater so I don’t put as many miles on the Avy. How does that fit your plans GM? I’m not buying ANY new GM truck…
I had a 2003 Avalanche that ran like a champ. Hauled 3 loads of sand in it and it hardly squated each time the only thing I had to change on it was the fuel pump. My truck was in great condition with all original engine and trans. I had just hit 139k miles and that was 5 years ago. The body still look incredible. In 2014 someone stole my truck and i didn’t know what i was going to do to replace it. It was by far the best vehicle in had. Couldn’t see myself driving another truck nor car. So i took my insurance payout and bought me another Avalanche 2007. Here it is 5 or 6 yrs later and I’m well over 200k miles and it still runs like a champ! As long as there is an Avalanche on the road I will have to just keep looking for one. I really can’t see myself in anything different at the moment.
I REALLY HOPE THE AVALANCHE IS COMING BACK!!
I love my 05 avalanche but having to replace the engine and transmission at 76and 85 thousand miles is unacceptable! My truck has been maintained according to specs and Always ran synthetic oil. Transmission slipped at 76,000 and blew a rod at 85,000. Over ten thousand dollars at Under 86,000 miles is not right. My truck inside and out is like new except one dent someone sideswiped me parked. My truck was Never overloaded or mistreated or denied service, Ever. To loose the transmission and engine so soon is unacceptable. No one cares!!!
I have owned 4 Avalanches. I like the luxury ride. I don’t need a huge bed, so the midgate option works well for me. The AFM system is my only complaint due to it’s high failure rate,but that is a corporate problem. Not sure how Honda is doing with the concept, but I imagine sales are sluggish. I just hope to have a good relationship with the low mile 2012 I just purchased because there’s nothing out there that compares.
I was under the impression that there were mandated restrictions on manufacturing low MPG vehicles per auto company. A certain percentage of a manufacturers’ product line had to get a higher targeted MPG and they had to drop a model line to make the quota. Avalanche was politically “squeezed out” of production per the false “global warming” and “peak oil” concessions now being debunked.
Had a 03 Avalanche got it cheap from a old guys estate a few years back 45k miles clean but electrician system in these gm trucks is shit put in a 30000 watt sound system 21 inch subs in covered bed and the shit gm wires cout fire when I was thumping some nice loud bass the Avalanche was a total losse got it out of my garage just in time gm don’t use good wiring for custom upgrades big loose spent 12k on my sound system destroyed give me Honda and Toyota any day there awesome for customs
Bought my 1st Ava in fall of 2001 a Black LT Z71 it was so different I fell in love with them and 1 yr later bought an 03 Black LT with all the toys. With kids in college I had to keep it till 2008 when I spotted a LTZ sitting in a dealers yard with Hugh discounts posted in the window. Well that wasn’t Black, but I learned to love that Maroon Avalanche along with everyone I met. It drew many positive compliments. While visiting this same dealership in 2012, I was informed that the 13 would be the end of production and I might want to order if I wanted to Take it to the limits. I only had think briefly and when I sat down and ordered my Blue Black Diamond edition . I ordered every available option including the 22 “ chrome rims and matching chrome boards. This has been my baby since it arrived on the 4th of July of 2012. Yes it is still in my garage, driven in summer only, currently has 38000 miles . Still turns heads and I receive compliments every time it’s out. No new Ave’s, that’s Just wrong. But i’ll Keep mine. Even have the Black Diamond dvd and step by step build book that came with it.
Come on, GM – please bring it back! Absolutely the perfect vehicle for me. Own 2013 4WD after previous 2005. Have 177k on it and would buy a new one come about 2021.
Have two improvements to suggest. Put a Honda Ridgeline 2-way tailgate on it. Im getting old and the reach is getting harder. Also, something really got screwed up on the cloth seats between 2005 and 2013 – it is nearly impossible to get dog hairs out of the newer material.
I own a 2012 Av LTZ. Just turned 135k miles. It is my 3rd Avalanche. I’d buy a new one in a heartbeat if GM brought a new model series Avalanche to market. Midgate is priceless. It’s my SUV on a daily basis for my family of 5. From sports to Scouts, to home improvement projects or just looking good on a night out…..my ’12 Av is my favorite of all the vehicles I’ve owned (and that count is somewhere around 20). Many of the technologies under the hood are approaching their end of use. For example, the cellular capabilities used in the OnStar app remote start will cease to function around the 2021-2022 timeframe. Yeah, it’s definitely a first world problem, but it’s something I use regularly without having ability to park the vehicle in a garage (home or work). Love my Av. Everyone that rides in it asks me what year it is. I’ve taken such good care of it they are shocked to learn it’s going on 8 years old.
I love my 2003 Chevy avalanche, I had to fight my husband in order to buy mine. I have 90 thousand miles on mine still going strong. I did have the computer unit replaced on it 5 years ago, so did my friend suburban . My husband drive my avalanche because we keep the back seat down for our dogs , they can travel and climb down without injuring themselves. I had a Chevy Silverado for 4 months and hatred it because it was light and I could not hide my stuff when shopping and had to make several stops. Please bring it back it was and is a great suvtruck. My still roars !!!!!!