[February 10, 2014]DETROIT (Reuters) — General Motors Co
is boosting discounts on full-size pickup trucks by thousands of
dollars to keep pace with competitors and to whittle down bulging
inventories on dealers' lots.
Dealers for rival Ford Motor Co, meanwhile, are also offering hefty
GM <GM.N> is running a national Presidents Day sale through February
28 at Chevrolet and Buick-GMC dealers that provides incentives of up
to $7,092 on the 2014 Chevrolet Silverado and up to $7,588 on the
2014 GMC Sierra. The more generous discounts are being implemented
just eight months after the redesigned trucks hit the market last
Ford <F.N>, whose full-size F-series pickup has been the
best-selling U.S. truck for 37 years, is providing much lower
incentives of up to $3,250 on its big trucks. The F-series is due
for a major overhaul late this year.
But many Ford dealers are advertising much richer deals on the
carryover 2014 F-Series, with discounts ranging up to $9,000.
On its website on Saturday, Mac Haik Ford in Georgetown, Texas, was
selling a 2014 F-150 XLT for $36,315 — a discount of $8,790 from the
suggested retail price of $45,105. At Marysville Ford in Washington
state, a similar 2014 F-150 XLT was being offered for $8,360 off the
$39,355 sticker price.
Chevrolet dealers are countering with even heftier deals, some much
cheaper than GM's official Presidents Day specials.
Jeff Belzer Chevrolet in Minneapolis on Saturday advertised a 2014
Silverado 1500 for $20,084 — $10,576 off the sticker — while
Wilsonville Chevrolet outside Portland, Oregon, listed a 2014
Silverado 1500 Crew Cab for $30,410, a discount of $10,705 from list
Since its new trucks were introduced in mid-2013, GM has struggled
to keep pace with Ford.
One bright spot for GM has been a significant increase in the
average transaction price, after incentives, on the pickups, which
had lagged well behind Ford just a year ago. According to research
firm Kelley Blue Book, the average transaction price on the
Silverado in January jumped nearly 12 percent to $40,575, while the
transaction price on the F-150 remained nearly static from a year
ago at $40,672.
But inventories of unsold trucks have been building at both
automakers. At the end of January, Ford had a four-month supply of
F-150s, while Chevrolet's supply of Silverados had climbed to five
months. A two-month supply is considered ideal.
GM's pickup sales also fell in January, partly the result of bitter
weather and partly because the company has yet to begin selling
heavy-duty versions of the 2014 Silverado and Sierra.
Combined sales of the Chevy and GMC pickups plunged 17 percent to
40,044, while Ford's F-Series sales dipped 1 percent to 46,536. A
year ago, before their overhaul, the Silverado and Sierra together
outsold the F-series in January.
Heavier incentive spending on the big trucks is likely to cut into
profits at both companies, although full-size pickups remain among
the most profitable vehicles in the industry.
Full-size pickups and sport utility vehicles account for more than
two-thirds of U.S. automakers' global pre-tax earnings, even though
they make up just 16 percent of North American vehicle production.
(Reporting by Paul Lienert in Detroit;
editing by Dan Grebler)