JERRY HIRSCH, LOS ANGELES TIMES
For decades, Chevrolet’s Silverado pickup has carried the load for General Motors Co., most recently providing needed cash and loyal buyers through the automaker’s bailout and bankruptcy.
Truck sales remain central to GM’s North American strategy, even as it has uncharacteristic success with new car models including the small Cruze sedan and the Chevy Equinox crossover.
That’s largely because GM makes $9,000 to $11,000 from each pickup sale, compared with about $5,000 for a passenger car, according to Brian Johnson, an analyst with Barclays Research.
But now, with a new generation of Silverado and GMC Sierra trucks introduced Thursday, the automaker is driving into rugged terrain. The models now in dealerships, the oldest of the major offerings in the fullsize pickup market, have lost market share as rivals from Ford Motor Co. and Chrysler Group have surpassed GM trucks in fuel economy and other features.
GM’s truck inventory has ballooned to 110 days despite hefty sales incentives designed to move the vehicles off dealer lots. Analysts worry that slack sales could set off a profi t-sucking price war in the industry if GM were to pile on incentives to fire-sale current models before the redesigned trucks hit dealerships in the second quarter of 2013. Still, the Silverado notches nearly double the annual sales of the Cruze, GM’s next-best-selling vehicle.
“GM’s profi ts in North America still ride in the bed of pickup trucks,” Johnson said. Financially, GM has surged since the dark days of bankruptcy. It has logged 10 consecutive profitable quarters for the fi rst time in more than a decade, including a $1.5 billion gain in the second quarter. Fueled in large part by sales of pickups and large SUVs, GM’s North American operations earned $2 billion in the latest quarter. Although pickups account for about 24 percent of GM’s U.S. sales, they make up a third of the automaker’s profi t in the region, Johnson estimated.
The company’s shares closed Thursday at $25.12, up more than 20 percent so far this year. But that’s still about half the price needed for the U.S. government to sell its roughly 32 percent stake in the company and recoup its bailout money. GM has yielded market share in the U.S. as Toyota and Honda have rebounded from inventory shortages caused by the Japanese earthquake and tsunami last year and as Ford and Chrysler have captured double-digit truck sales growth this year.
Combined, the Chevrolet Silverado and its sister GMC Sierra made up 34.7 percent of the full-size truck market through the fi rst 11 months of this year, according to MotorIntelligence.com. That’s down from a 40.3 percent share in 2008, before the company’s bankruptcy reorganization.
Meanwhile, Ford’s F-series has captured 39.6 percent of the market this year, up from 32.8 percent in 2008. Chrysler’s Dodge Ram is at 18.1 percent, up from 15.6 percent in 2008. Ford has effectively pitched the V-6 turbocharged engine in its F-series, which buyers like because its fuel economy is slightly better than the GM offerings and it has more power, Johnson said.
Meanwhile, Chrysler has taken a more focused approach in marketing its Dodge Ram trucks, refreshing the interior and adding an eight-speed transmission to boost the fuel economy of its V-6 model.
PHOTO: AP Photo