Good time for pickup buyers as GM sweetens deals
DETROIT (AP) — GM is matching or beating discounts from rivals Ford and Chrysler this month. It miscalculated in November when it reduced incentives and truck buyers went looking elsewhere for sweeter deals.
The three Detroit automakers have been vying for new truck business all year as the market continues a slow rebound from the Great Recession. Experts say buyers can now get discounts of $4,500 or more on some of the best-selling vehicles in the country. Throw in low interest rates, sweet lease deals and abundant financing and it’s a good time for people who are in the market for a truck.
“They’re all very competitive with each other right now,” said Russell Barnett, who owns dealerships around Winchester, Tenn., southeast of Nashville, that sell GM pickups as well as the Ford F-Series and Chrysler’s Ram. “The manufacturers are putting a big emphasis on it, and there are a lot of people in the market.”
GM is offering up to $9,000 off remaining 2012 models pickups and close to $4,500 off 2013s, while the other automakers have either held steady or raised incentives on certain models. Dealers say Chrysler’s average incentive is around $5,000, while Ford’s is less, around $4,000.
That means good deals on Ford’s F-Series pickup, the top-selling vehicle in America, as well as the Silverado, which ranks second. Together, the Detroit Three control 83 percent of the U.S. full-size pickup truck market.
Chrysler led the way on incentives most months this year, sometimes exceeding $5,000, and GM wasn’t far behind. But in November, GM cut discounts on the Silverado and Sierra by about $400, falling almost $1,200 below the Ram and $100 below Ford, according to figures from J.D. Power and Associates. That came just as the pickup truck rebound accelerated, costing GM sales.
Silverado sales fell 10 percent last month, while Ford truck sales rose 18 percent and Ram leaped 23 percent. So Silverados and Sierras began stacking up on dealer lots. At the end of November, Chevrolet had enough Sierras to supply dealers for 138 days at the current sales rate, according to Ward’s AutoInfoBank. By contrast, Ford had a 90-day supply of F-150s, and Chrysler had 106 days’ worth of Rams. Automakers consider a 60-day supply to be optimal to give buyers enough selection, although that runs a little higher on pickups because there are so many different versions.
GM executives said their strategy in November was to keep incentives down so consumers would buy cars and trucks on their merits. But GM’s trucks haven’t been redesigned since 2007, putting them at a disadvantage to newer trucks from Chrysler and Ford. GM was forced to respond with bigger discounts this month.
“We went harder because we missed on November,” Mark Reuss, GM’s North American president, said last week as he unveiled new trucks that will hit showrooms late next spring. “We’re off to a good start,” said Reuss, who wouldn’t reveal by how much GM had reduced its truck inventory.
The Ram has been the most heavily discounted of the pickups because buyers expect big discounts from Chrysler, said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area firm that tracks auto sales trends. GM has been in the middle. Ford has been able to keep discounts down due to the popularity of its turbocharged six-cylinder “Ecoboost” engine that can tow loads yet still gets decent gas mileage, Schuster said. Although most pickups sold in the past have had more powerful eight-cylinder engines, half of Ford’s sales this year have been equipped with V-6s.
At Serra Chevrolet in Southfield, Mich., north of Detroit, truck sales have been strong all year, but December is shaping as one of the best months of the year because of the incentives, said Greg Brown, general manager. “I’m selling every one I get,” he said. “I think the incentives are phenomenal. It’s driving traffic in here.”
And GM promises to remain competitive with discounts, at least in the short run, said Don Johnson, head of Chevrolet sales. “We want to make sure we get our unfair or fair share,” he said. But he added that the company won’t go into “liquidation mode” to sell trucks. And this month GM expects to build only 7 new pickups for every 10 it sells, which will also trim inventory.
Schuster said GM has been making too many trucks for the market.
He cautioned that the deals may not last long, especially as GM gets closer to selling its revamped trucks. The housing industry is coming back, and that always increases truck sales. And the average age of pickup trucks on the roads is approaching 11 years, so companies and individual buyers are replacing them, Schuster said. That means there will be demand that could cut into supply and increase prices, he said.
“You have everyone trying to finish the year strongly,” he said. “As we then look into next year, we’re likely to see higher prices, certainly on the new trucks.”