General Motors Had The Lowest Incentive Spending Of All Domestic Automakers In August 20145
Fact: General Motors posted a 1.24 percent drop in sales to 272,423 units in August of 2014 in the U.S.
Fact: only GMC sales were up, while Buick, Chevrolet, and Cadillac were down.
Fact: 28,000 orders have been placed for the 2015 Chevrolet Colorado, and 14,000 for the 2015 GMC Canyon.
And here’s another, less-publicized fact: GM’s incentive spending as a percentage of average transaction prices (ATPs) was 10.4 percent in August. That is the lowest of all domestic automakers by a significant margin, according to J.D. Power PIN estimates. In fact, GM’s spending was down a full percentage point compared to both August 2013 and July 2014.
Translation: as other automakers (like the Chrysler group) post double-digit sales gains while pretty much giving away their vehicles, The General is being significantly more constrained with its incentive spending, which should theoretically result in higher profitability, while signifying that people are buying GM’s product for the product, rather than the price. And that’s a good thing, especially when compared to the way Old GM did business just as recently as 2008.
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Might fix the typo.
This is no secret. The transaction price and profits are up at GM. The only real drain has been the recalls but that will soon pass.
Chrysler has made large gains for two reasons. They were tanking in sales and any increase over last year will show a large percentage gain.
Second Chrysler is way behind on new product as we have only seen two new cars. At this point Jeep is the only real bright spot as the Cherokee is selling better than expected.
My in laws just bought a 300 that is nice but very outdated. But why did they buy it because it was $10,000 off sticker. Now that they had it for a while I am getting the feeling of buyers remorse. It lacks many of the things their Cadillac had that this car does not offer. That leads me to the next problem Chrysler has is repeat buyers are the second lowest in the industry. Only Mitsubishi is lower.
GM still has work to do yet but they are 4-5 years ahead of Chrysler and on the right path. Chrysler is juicing up some engine to generate excitement but not much else. They still are hurting in the small car segment and rebadged Fiat’s are not going to save them here. If it were not for Jeep and Ram they would be gone by now and we all know that.
Typo fixed. Thanks for pointing it out.
No one said it was a secret. But no one (literally, no one) is mentioning this in the media… hence, it deserves attention.
The real question is when GM’s efforts in turning around its product and business strategy will begin to pay off in terms of 1) market share and 2) considerable profit increases. We’re seeing incremental growth in both of those today, which might be a great way to improve things over time… but the real question is how it will all look long term.
In other words: by year 2020, how much “tangible” progress will have been made on both of the areas outlined above? Will it be notable and the delta in performance between 2010 and 2020 monumental… or will it be a lackluster performance?
Simple it will be as I and many other say 10 years after the bail out before GM is to where it should be.
Now the questions should be will the recall cost slow this progress down? Sales are fine and so far the cost are being contained.
Will the slow economy slow this progress down. What will the economy be for the next5 years? The Jury is still out
Will the world relations falling apart nearly everywhere slow this down or even stop it. Lets face it a conflict with China or even major terror attacks can slow or damage an already fragile economy. Will thing turn around or continue to erode and the jury is still out on that.
I am not so much worried about GM and what they are doing as I am about the things on the outside that can effect or influence the GM recovery. I is what they do not have control over more than what they do that is worrisome..
The keys are to remain profitable above all other things.
Maintain or gain market share globally. They will lose some here and there but global markets are key to all automakers.
Finally the development cost, how to contain the increases in development cost is the real killer here. There is not a MFG not scared to death on this one. Most if not all will have to share these cost with other MFG like the Ford GM deal or merge with a dance partner in some way. The technology needed to meet future regulations is going to be gigantic and few even VW can pay the bill alone.
The next ten years will be a challenge for all makers and not all will survive in tact. We have not seen the last of buy outs and closures.
Our lack of foreign policy or poor policy has upset the balance of power in the world and others are not taking advantage of it.
Right now things are fine but it is something that can change for any maker at this point. As it is now if GM keep investing in new product and controls cost they will be fine but that is all in their hands.
Very true regarding the external environment. Good point indeed.
Regarding the development costs, the name of the game should be “de-complexification”. Even today, GM is far too complex compared to the leading automakers. Heck, look at VAG, BMW, and Benz. VW will operate VW, Audi, Bentley, Porsche, Lambo, Seat, and Skoda with four scalable architectures, while BMW and Benz will each have one platform for RWD-based vehicles and another for FWD-based vehicles.
Meanwhile, GM is cutting complexity, but is still a step behind. Another issue is that they seem to still be having problems figuring out how to scale Alpha and Omega… or whether to put CUVs on those platforms.
The “de-complexification” [Is that really a word? It works for me LOL!] Is going on at GM but there again the culture is now just getting caught up on several different levels.
The CUV will go to the Alpha and Omega but I think a lot of the issues were due to culture on what they as a company agree to do and not so much just doing it. GM’s major issue for years has been presenting and then supporting a business case in many vehicles. They have a lot of good ideas but they got bogged down or eliminated in these comities or in some cases approved when they should not have been.
This is where people like Mark need to be support and given more power to make calls to get the product out sooner. Just look at the case where he has had a fight on the quality of the door handles on the Omega Cadillac. He wanted a higher grade and much more world class handle but inside GM there were many fighting for a cheaper less quality handle. What is the first thing as buyer touches on a car? The handle. Are you going to stick them with the same cheaper one from a Chevy? This is kind of like using the steering wheel from my HHR SS in the ZR1 Corvette. It is great for me but not so much for the owner of a $120K Corvette. You can trickle this down but quality but you should never trickle up. This is why the Alpha being a Cadillac first was a benefit for Chevy vs. if they made it a Chevy first and then a Cadillac. Their is just more value in the trickle down.
The real key points will be learning to also how to leverage cost out. Be it using one platform effectively for several cars or the partnership with other makers. Even a Company like BMW has been pointed out as being one that will need a dance partner in the future to remain autonomous. Same for Honda as they can no longer just foot the bills alone.
We are already seeing GM building transmission using Ford money to share the product.
As for Omega and Alpha the CUV was not delayed on how to do it but I feel it was due to want to do it buy some at GM. There is just way too much disagreement with some projects. This is what I feel needs fixed the most at GM now. We knew a long time ago the Omega was targeted as a large SUV/CUV at Cadillac but here there is still a lot of indecisiveness over that. I think the fact they needed another model to leverage it out was what pushed it on.
There were some engineers already saying that the large body on frame SUV may be in the last generation too. I have heard there is disagreement there too. They are at the limits of cutting mass and the only way to get lighter will be unibody as the entire industry is doing or to move the model up in size where regulations are less.
I have been predicting the Ranger would also be coming here for Ford for more loss of mass in a half ton truck as the Aluminum will only take you so far. The truck is built to come here and I am now seeing stories of a possible return on the web now. Look for Fiat to have one for Ram too.
The market shift to the CUV will be interesting to see how it effects sedan models. They are just more vestal and if sales on sedans keep dropping will this hamper new sedan models. The CUV market this year passed up the sedan market in sales.
That brings me to my last point. How well GM does will depend on how they develop product to changing markets. Right now the Small CUV is king and GM is leading here and only going to get stronger. Others like Chrysler have the Jeep line and that is it. I see GM holding a strong hand in CUV models for the next 5 years or more of all sizes.
This is just a very complex matrix and no one has a for sure answer to the future. Simple, faster and more leveraged will work but what else will it take in development is the question. Things just like what does the customer really want?