General Motors, the only domestic automaker whose pickup sales dropped in
November, faces a difficult choice in December: boost incentives or risk
losing sales during one of the biggest pickup sales months of the year.
In November, sales of the Chevrolet Silverado fell 10.4 percent and sales of the GMC Sierra fell 2 percent as the company refrained from matching incentives that helped stimulate sales of competitors' trucks.
GM spent the least of the Detroit Three on incentives in the large pickup segment. Some competitors discounted their trucks by as much as $5,000.
But there is a price for that pricing discipline. By the end of November, GM dealers were holding 139 days' supply of full-size pickups, far more than the 80 to 90 that is considered ideal.
Ford ended the month with a 90-day supply of F-Series and Ram had a 106-day supply.
"When you have the oldest truck on the market and the lowest incentives, that tends to put a damper on things," said Jim Hall, an auto analyst for 2953 Analytics in Birmingham.
Ford said its discount spending on the F-series line was about $100 per truck less than last November.
Chrysler said sales incentives on its 2012 Ram trucks were within a few hundred dollars of rivals' for the same model year.
In December, Hall said GM must decide whether it is still willing to sacrifice sales and market share in return for a higher profit on each truck it sells.
"At what point do declining sales start to hurt you more than what it would cost to incentivize it?" Hall asked.
Kurt McNeil, GM's vice president of U.S. sales, said the company will stick to its plan of disciplined incentive programs designed to boost transaction prices. But he also vowed that GM would not sit idle.
"December should be an all-new ballgame," McNeil said. "It is traditionally the strongest month of the year for Silverado."
GM offered average discounts on the Silverado of $3,988 per unit last month, down from $4,459 a year earlier. Incentive spending on Sierra dropped to $4,226 from $4,801 a year ago.
GM's goal was to sell down its inventory to 80 to 85 days' supply by year-end.
"They've been talking about getting the pickup truck inventory down to 85 days for six months but then we're at the moment of truth and they're blaming the competition," said Adam Jonas, an auto analyst for Morgan Stanley.
GM spokesman Tom Wilkinson said the pickup inventory looks worse than it really is.
The automaker purposely built up its inventory so that it has enough trucks while it shuts down and retools its three North American truck plants next year to prepare for the new model.
GM plans to unveil its next-generation Silverado and Sierra pickups to the media on Thursday and then show them to the public for the first time in January at the North American International Auto Show.
But those trucks aren't expected to go on sale until the second quarter of next year.
Chrysler is trying to take advantage with the 2013 Ram 1500 that went on sale in October with a new optional V6 Pentastar engine, a new transmission and an upgraded interior.
Ram's pickup sales increased 23 percent in November, but more than 90 percent of those were 2012 models.
Bloomberg News contributed to this report.
Distributed by MCT Information Services
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