Referring to the launch of GM’s K2XX-based pickup trucks — the 2014 Chevrolet Silverado and 2014 GMC Sierra — a recent statement from Barclays Capital analyst Brian Johnson stated that, “the launch has been arguably the least successful large pickup launch over the last 15 years.”
The analysis states that the recent decline in sales started with the 2014 model year trucks, yet despite their all-new nature, GM still hasn’t been able to close the gap with Ford’s F-Series — which has reigned as the single best-selling truck nameplate for over three decades. But one could argue that this is due to the awful weather conditions affecting much of the U.S., relegating potential consumers to their homes rather than shopping for new vehicles. In addition, GM’s truck sales did climb in 2013 overall.
In an attempt to spark sales for the full-size duo, GM has plans to roll out more sales incentives for 2014 Silverado and 2014 Sierra buyers next month, accompanied by a nation-wide sales campaign alongside the ever-popular NCAA March Madness basketball tournament hype. With this in mind, GM is presenting the incentives with advertisements during nearly every game in the bracket.
Though one may presume the state of affairs is rather unfavorable for The General, recent reports are showing that even still, average final transaction prices are nearly $4,000-$5,000 higher than those from last year. Even with the slight drop in sales, this rather large growth in margin is impressive for GM all the same, so the state of affairs doesn’t seem that bleak for GM after all.
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And this is the first time there have been little to no incentives in 15 years.
Once GM starts offering money off and if sales do not respond then we will worry. Note it has to be more than just money off of the V6 model too.
Todays market is all about price anymore. Might note VW even has been working on a value division if they can decide what to name it and other internal arguments they have going. I see other brands looking to do value cars too.
Bull has nothing to due with weather. It’s called nobody can afford them. They are over priced. ESP the crew cab models(most expensive) built in Mexico…
Drop the price $12000 to start
$4000 to $5000 higher transaction price does not mean necessarily $4000 to $5000 more profit per truck. It means GM is either selling higher spec truck, charging more for the new truck with similar equipment to the old, or a combination of both. Also, as is normal in the industry, it cost GM more to build one new truck, compared to what it cost them last year to build the old truck, when you take into consideration stuff like more expensive, high strength steel, higher quality materials generally, and the millions of R&D money they need to recover. There is nothing unusual with all of this, it’s all normal, but I guess what I am saying is, it is totally wrong to say GM is making $4000 to $5000 more PROFIT per truck, an assumption i have seen stated as fact many times on these treads.
Autopal,
You are indeed very right about your statement regarding actual profit to higher margin, as the sum would indeed be reduced, but netting a higher truck transaction price of nearly one eighth more than that of the vehicle’s retail value (assuming around $40k) is no small margin of increase. Also, the validity of it truly being the “least successful pickup launch in 15 years” can be debated, but for a man from a fairly reputable company to say such a statement does carry some weight. We do understand he is just one man, but such polarizing words are ones which we intend to show to the community and let them interpret as they please. I can assure you though that the article was not written for the endorsement or accomplishment of some secret objective; simply the idea of being informational to what Brian Johnson stated. Thank you for the comments and we appreciate your thoughts. Jonathan
Profit on that higher ATP is around half assuming this increase is supported by higher option content.
So if they increased the ATP by $5000 then the additional profit is about $2500.
In January they sold 29,000 trucks. 29,000 x $12,500= $360 million profit
In Jan 2013 they sold 35,000 trucks. 35,000 x $10,000= $350 million profit.
However they had pretty large incentives in ’13 so I doubt they made the $10,000.
Also, not to defend GM, but this story about it being the worst launch in 15 years is just one person’s opinion, which differs from the view of most of the respected automotive people in the industry. Things could have been better, and sales is less than GM had hoped, but this sensational story is a stretch, and maybe is aimed to get some publicity for whomever these “Barclays” people are.
I agree with Dmax Fan. It has nothing to do with weather. Just the other day the news was giving figures for housing and a pretty good upturn during this same time period it seems. So people will get out do the housing thing but not vehicles, bulls*** on that. It has to be the truck or the price and I find nothing wrong with the trucks’ design. Granted they look a lot like the last ones with only “evolutionary” not radical changes. But like I said I find them appealing and nothing wrong with the looks, etc. So go figure.
I always loved GM trucks. I just bought an F150 however. Why, I want a truck made in the USA, with as many parts as possible made in the USA, Ford by far beats GM in this department. Being I am a typical middle aged male, my guess would be that a good amount of your sales are going away for this same reason.
GM still made more money selling fewer trucks than they did last year, so there’s that.
says who? Higher transaction price does not mean higher profit per truck.
Ram’s first run of 8000 diesel half tons sold out in three days. People signing papers for vehicles that aren’t built yet, no test drives, dealers don’t have even have one for you to see. THAT is a successful launch, in case people here are confused about the definition of the term. Meanwhile, cobwebs grow on the local dealers’ Silverados.
I know there are naysayers here about diesel being viable in the half ton market, but it’s okay to apply some common sense sometimes, and listen to customer demands. It was only two or so years ago that everyone was so sure that a gas turbo V6 doesn’t belong in a pickup… . You either ride the wave of change or you will find yourself beneath it.
I thought I was a typical truck buyer!!!
And I did not even know about the difference so it would not effect my buying habit.
I disagree, the weather makes a huge difference, period, i have an auto business and the weather DICTATES sales , cold and snow very little action going on, one nice day and sales take off !
@Robert, the same weather occurred at Ford, Ram, Toyota dealerships. Ram and Toyota saw a sharp increase in sales, Ford’s remained the same. GM’s were down despite having the newest model. It’s just a matter of accepting the fact that GM blew it with these trucks.
You have to take into consideration what are GM’s, Toyota’s, Fords strong markets. GM’s strong market is Midwest and they have had two of the worst weather months in history. Weather dictates sales, no doubt. Watch GM’s sales take off with better weather. It was -2F on my way to work today morning. You’re going to go car shopping only if you have no vehicle to take you to work tomorrow morning.
I do think the body style is virtually unchanged and a ton of people don’t even understand what the technical improvements are. BUT I do not feel it is an accident that GM rolled out the biggest Silverado ever. Many people, including myself, have downsized and don’t need such a big truck. I like my 2004 size. I know I am waiting for the Colorado and Canyon. I do not feel I am alone. If they are what GM says they will be they will fly off the shelves and the Silverados are not going to sell so I hope that they make a lot of them… put a lot of high end stuff in them and they will sell.
Frances you are correct.
There was noting wrong with the last truck and nothing wrong with this one. The body is all new but so similar that many people never consider all the improvements in the new truck.
The real issue is they went from a heavy discounted truck to a more expensive truck with no incentives.
The next issue is the pricing of the new Colorado/Canyon. They have to keep it low enough to make it an attractive alternative to the full size trucks. The last small models were hurt by the large incentives that nearly put the large trucks at the same price.
GM discounts the new large trucks too much they will doom the smaller trucks before they arrive.
GM does need a Diesel but only a fool would think it would make a dent in the deal here.