Trucks hold back GM

Trucks hold back GM http://www.detnews.com/apps/pbcs.dll/article?AID=/20070501/AUTO01/705010392/1148
DETROIT -- A slumping pickup market is hindering General Motors Corp.'s
turnaround effort in North America just as the automaker was gaining momentum.
GM was counting on its new full-size GMC Sierra and Chevrolet Silverado pickups to be smash hits, but the new trucks launched late last year are taking longer to sell than the outdated models they replaced, and they're leaving showrooms with just $420 less in incentives.
GM sold 200,505 of the trucks through the first three months of 2007, according to Edmunds.com, a figure one GM insider said fell well below internal projections.
The impact of the sagging truck market will come into sharper focus this week as GM and other major automakers report April sales today and GM releases its first-quarter financial results Thursday.
The prolonged slowdown in the U.S. housing and construction markets, combined with rising fuel prices, is weighing on pickup sales nationwide -- a high-profit segment on which Detroit's automakers are heavily dependent.
"Things aren't falling apart, but those external factors are having an impact," Jesse Toprak, chief economist for Edmunds.com, said of GM's pickup sales.
GM officials declined to discuss truck sales, saying the automaker doesn't comment on sales and earnings ahead of announcements. Analysts expect GM to post a profit overall in the first quarter, but will be closely watching North American earnings for signs of progress.
GM hoped the high-profit Chevy Silverado and GMC Sierra would far exceed sales of the 2006 models that were running out of steam after a four-year run.
While the new Silverado and Sierra are generally outperforming the competition, they have been hurt by the down market.
GM increased Silverado and Sierra production 11 percent in the first quarter in anticipation of strong demand. But sales are up just 4.8 percent through March compared to a year ago, according to Edmunds.com.
Moreover, the trucks are being discounted $2,453 on average and are sitting on dealer lots 81 days, according to Edmunds' data for the first quarter of 2007. The old models carried $2,874 in incentives and moved in 55 days during the same period a year ago.
Considering the trucks were completely made over -- bigger, more powerful and available with more features -- GM and Wall Street were expecting more.
"Usually, you'd want to see a double-digit gain" on new products, Toprak said.
Automakers feel pinch
Troubles in the truck market have been looming for GM and other automakers.
The segment is heavily dependent on contractors who use the vehicles for work. As a result, demand has slumped with the housing market, as fewer workers build fewer homes.
Industrywide, full-size pickups, which account for 22 percent of vehicle sales for Detroit's automakers, were down 10 percent in 2006, according to Autodata Corp. Sales for the segment were down another 4.6 percent for the first three months of 2007 compared to the same time last year.
Toyota Motor Corp. surprised many in the industry by discounting its new full-size Tundra pickup months after it debuted.
Ford Motor Co. saw sales of its F-Series fall 14.1 percent in the first quarter of 2007, according to Autodata, following a year in which the Dearborn automaker's sales benefited from a post-Hurricane Katrina construction boom on the Gulf Coast.
"The housing market doesn't seem to be getting any better -- that is a concern," Ford sales analyst George Pipas said. "The prospects for a rebound are more remote today than they were four months ago."
Hopes were high
GM had hoped the new Sierra and Silverado, widely regarded as well-executed improvements on their popular predecessors, would offset some of those market forces. The automaker, like many in the industry, also was surprised by the depth of the woes in the housing market.
In the past couple of weeks, GM Vice Chairman Bob Lutz has made public statements reflecting concern about the impact the housing downturn will have on the auto industry.
But while the trucks have performed well -- their share of the large pickup segment increased nearly 4 percent -- they haven't delivered all GM hoped.
Research firm Global Insight is predicting that Silverado sales will be up 4.6 percent through April and Sierra sales will jump 5.9 percent.
And one analyst estimates GM's April truck sales fell 3 percent.
GM's U.S. sales in April may have dropped an adjusted 4 percent, falling as much as 7 percent for cars and 3 percent for trucks, Christopher Ceraso of Credit Suisse Holdings in New York said in an April 25 note. GM's large pickups "may struggle broadly given the weak housing market," the note said.
Truck competition heats up
The tough market forces come at a time of intense competition in the truck market. Toyota is out with the new Tundra. Nissan Motor Co. unveiled longer and heftier versions of its Titan truck. Ford's new F-Series Super Duty truck lineup hit showrooms in January. And both Ford and DaimlerChrysler AG's Chrysler Group are discounting their older pickups by up to 20 percent, Edmunds' Toprak said.
"They have sold more trucks in this weak market that they did last year," he said of GM. "At least that trend is positive."
Dealer Steve Cook, owner of the Cook GM Superstore in Vassar, is seeing the pickup problems firsthand.
"It's a competitive market and manufacturers are having a hard time getting people to feel it's a good time to buy a truck," Cook said.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

If gasoline prices go up to US$4 per gallon, it will not encourage "Office Joe" to buy a pickup. Professional people will have little choice but to pay the extra money, and bitch.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Yep, the truck fad is dying fast just like the Rap music fad is on the way out and just as Disco is long dead. Fads never last forever.
The large truck market is returning to those who have a real need for them, which puts it around the long term historical range of 20-25% of new vehicle sales, not the 50% range it spiked to in the last of the cheap fuel days.
GM is lucky to have new trucks right now because without them the sales slide would be even worse. They are holding/taking share in a declining market.
John
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

My father-in-law owns the small GMC pickup, which I believe is called Sonoma. It has the 4 cylinder engine. I guess he bought it for the size, as he was at the age when he could not handle a full sized pickup.
This little vehicle has no power, but to compensate, neither does it get good mileage...It gets about 17-18 mpg.
I dont know if the market is large for a small load carrier of this type, but if so, they need to make some real changes.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
snipped-for-privacy@nospam.nix wrote:

The Canyon/Sonoma are not competitive entries, unless you think of the Ford Ranger as the only competing smaller truck. Toyota Tacoma is by far the best truck available in the US in the smaller truck category.
The big GM trucks are strong entries, but the little guys ... not.
John
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
John Horner wrote:

They'll still sell a lot of them for fleet markets; for example my employer is now buying Colorados and Uplanders (?!?!?!?!) as service vehicles, now that the Astro has been discontinued. They won't buy a foreign branded product because they don't want to project the image of not supporting the domestic economy (even though they are incorporated in Bermuda. Heh.)
nate
--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Motorsforum.com is a website by car enthusiasts for car enthusiasts. It is not affiliated with any of the car or spare part manufacturers or car dealers discussed here. All logos and trade names are the property of their respective owners.