DETROIT Dec 10 General Motors Co is
gearing up to show off its new full-size pickup trucks this week
just as the No. 1 U.S. automaker is boosting incentives on its
rising supply of the current models.
GM will unveil the redesigned versions of the Chevrolet
Silverado and GMC Sierra in Pontiac on Thursday, but consumers
will not be able to start buying the new 2014 models until the
second quarter next year.
Until then, they will have to be satisfied with getting a
peek at GM's plans, while also having the option to buy the
"It's a huge cash-flow machine and it's the first
introduction of this product post bankruptcy and that means
something just for the psychology for General Motors," said
Guggenheim Securities analyst Matthew Stover, who has a
"neutral" rating on GM shares.
The rollout of the new trucks and related SUVs, which
analysts say generate profits of $12,000 or more, are critical
for GM, which filed for bankruptcy in 2009 and received a $50
billion U.S. taxpayer-funded bailout.
While new small cars like the Chevy Cruze have garnered
positive reviews, the big pickups and SUVs - Chevy Tahoe and
Suburban, GMC Yukon and Cadillac Escalade - remain top draws at
dealerships. Their combined U.S. sales rose 11 percent last year
to more than 799,000 vehicles.
And even though they are the oldest truck models on the
market, GM pickups still ranked No. 2 in all U.S. vehicle sales
last year, behind only Ford Motor Co's F-150 truck.
Analysts said trucks and SUVs account for about 60 percent
of GM's North American profit, and Citi estimates the new models
could bring GM more than $1 billion in additional operating
earnings in 2013 and 2014.
GM has told analysts and investors the magnitude of product
advancements in the new trucks will be as large as the last
redesign in 2006, which helped the automaker gain market share.
The new trucks are part of the company's revamp this year and
next year of more than 70 percent of its U.S. product portfolio.
Guggenheim's Stover and dealers expect GM's new trucks to
offer strong fuel efficiency without sacrificing power so it can
better compete with Ford, which has found great success with the
F-150 that includes the Ecoboost turbocharged, six-cylinder
Analysts and dealers also expect GM to vastly improve the
interior on its big pickups, which start at almost $24,600.
Given the trucks' strong brand equity, GM simply needs a strong
"All the dealers are really looking forward to having a new
truck," said Steve Hurley, owner of Stingray Chevrolet near
Tampa, Florida, adding the Silverado was his top-selling
vehicle. "There's no doubt, the Silverado launch is the most key
launch of the 13 (Chevrolets) that are coming in 2013."
Hurley, who is on the Chevy dealer advisory council and has
seen the new design, touted the 2014 model's more steeply raked
windshield, squared off lines and beefier fenders in explaining
why he believes it will do well.
In the meantime, GM's inventory of the current Silverados
has soared to 139 days worth of supply.
GM has acknowledged its truck inventories were too high, and
it would miss its end-year target of having U.S. inventory of no
more than 220,000 pickup trucks, or about 85 days of supply.
Automakers typically prefer to have closer to 80 days supply of
Officials last week said they would focus on cutting
production rather than profit-sapping rebates, but on Friday
nevertheless began offering cash incentives of up to $2,000 on
the current models after GM said it was caught off guard by
aggressive deals from Ford, Chrysler Group LLC and
Nissan Motor Co.
According to Edmunds.com, November incentives on the
Silverado were $4,610 per vehicle sold, compared with $4,533 for
Chrysler's RAM 1500 pickup and $4,166 for the F-150.
GM also is offering more attractive leases on the Chevy
Malibu and Cruze cars and Traverse SUV. The various deals are
for vehicles purchased through Jan. 2.
GM officials said the company's recent ability to raise
prices has given it room to boost incentives without hurting
itself too much.
"We've always said we'd be competitive and we clearly
weren't in some segments, including trucks, last month," GM
spokesman Jim Cain. "What we're doing is trying to level the
playing field, so there have been enhancements.
"We've come so far from old GM, where incentives were every
month the highest in the industry and that was reflected in our
poor resale values," he added.
Before the 2008-2009 downturn in the auto industry, U.S.
automakers routinely overproduced in order to keep factories
running and then piled on consumer incentives to prop up sales.