GM's 2014 Silverado Is No. 1

Ford (NYSE: F  ) has enjoyed years of success with the F-Series, which remain America's best-selling vehicles. That status is something General Motors (NYSE: GM  ) aims to change with the 2014 Silverado. In an industry that sees vehicle makeovers every two to three years, the Silverado is considered a dinosaur -- the last redesign was completed back in 2006. Yet there's no doubt that the 2014 Chevy Silverado will mark the No. 1 most important vehicle launch since the automaker went bankrupt. Here's what you need to know.

Just how important is the Silverado?
Now that it's mostly done dealing with the aftereffects of its $50 billion U.S. taxpayer-funded bailout, GM is spending capital to redesign its vehicle portfolio. It's been estimated that GM invested between $3 billion and $4 billion to develop these new trucks and engines. That's a lot of money invested that won't be evident from the trucks' outside appearance, as the design remains very similar. 

Source: General Motors Media Photos.

The money spent will, however, be evident from both an investing and consumer standpoint. GM is updating the interior with plenty of technology innovations, as well as upgrading the gas mileage with its line of EcoTec engines. For investors in particular, money put into revamping the plants where the trucks are built will help improve operating efficiencies and profits per vehicle. It's all part of the CEO's plan to clone its rival's "One Ford" strategy and raise operating margins in the U.S. to 10%.

Doing it right the first time
It's incredibly important for management not to rush this launch and to do it right the first time. Chevy's 2014 Silverado will have a year's head start before the next-generation F-150 is released and can use a surging pickup segment to win back lost market share. Here's what GM Global product development chief Mary Barra had to say about the launch:

"I'm very confident that everything's on track and moving forward. ... It's been the most rigorous process we've gone through to make sure we put a high-quality truck into the marketplace, day one. ... [The launch is] going to be shortly." 

The current models are estimated to generate up to $12,000 of profit per vehicle, but with the Silverado's old age, GM has to increase incentives to succeed against its competitors. Investors can expect margins and profits to improve with the new model.

Inventory
GM's management will have to carefully control the 2013 Silverado inventory, which spiked early this year. GM decided it won't increase pricing on the 2014 model, which is an aggressive move and will make selling old 2013 models more dependent on a major boost in incentives. In other words, GM could be stuck with less favorable options to move the old trucks off the dealer lots. Correctly timing the launch of the new model while winding down current inventories will be key to considering this launch a success.

Bottom line
GM's past management ran the company into the ground before the recession came along and finished the job. With a new crew running the ship, things have steadily improved, albeit more slowly than at rival Ford. By 2016, GM is going to replace, refresh, or redesign 90% of its vehicles, and proving to investors in the meantime that it can have successful vehicle launches could boost demand for its stock. GM wants to avoid ugly recalls shortly after the release of its vehicles -- as Ford encountered with the popular Fusion and Escape models -- and it certainly wants to avoid taking too long to get finished products to the lots, which is what happened with the Lincoln MKZ.

In short, this is the single most important launch for GM in the past 10 years. The world is watching, and as an investor, I hope GM does it right the first time.

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Read/Post Comments (23) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 27, 2013, at 11:40 AM, AmericanFirst wrote:

    FYI,

    GM recalled more vehicles in 2012 than Ford. Fusion / Escape in Top 10 vehicles sold in the U.S. Ytd.

  • Report this Comment On April 27, 2013, at 12:22 PM, TMFTwoCoins wrote:

    Yes, GM recalled slightly more vehicles in 2012, yet if you combine all recalls since 2010, GM has the least of any major automaker. While both have had very few in comparison to Toyota and Honda. Toyota more than tripled GM's number of recalls.

    Consumers shrugged off the combined 6 recalls between the Fusion and Escape, but that doesn't mean we can get complacent.

    Mulally said the biggest challenge at Ford would be smooth vehicles launches. I don't want to see GM have anywhere near the number of recalls Ford had. The media would blow it out of proportion even if the over number of vehicles was minimal. That's because it has a more tarnished brand image -- in my opinion. GM might not have the same success if it has the same number of recalls with its new launches as the Fusion and Escape.

    Thanks for commenting, you always seem to at least have substance and perspective.

    Daniel

  • Report this Comment On April 28, 2013, at 1:51 AM, bcweir wrote:

    Obviously a journalist wanna-be cashed his bribe check from GM early. How else can you explain a title for this article claiming that the 2014 Silverado is number one without GM even selling ONE truck to the public at the time the article was written. This article has as much credibility as Bob Lutz pleading poverty after stepping off his private jet.

  • Report this Comment On April 28, 2013, at 1:54 AM, Snoopy2012 wrote:

    Stupid article and misleading title.

  • Report this Comment On April 28, 2013, at 2:10 AM, emjayay wrote:

    Yeah, the headline is obviously idiotic and the blog loses all credibility when it first uses or at least allows a stupid unsupported headline, and then even worse leaves it up even after comment after comment points out their error.

  • Report this Comment On April 28, 2013, at 4:12 AM, boobut wrote:

    Motley fool is truly foolish. Always bad advice. Just trying to make a buck off of you.

  • Report this Comment On April 28, 2013, at 6:39 AM, diffyq99 wrote:

    Wrong! Ford F150 has been the best selling truck for 33 years running. Your title is misleading and you need to quit trying to prop up your taxpayer backed up loser of a company with false info. Writing it so won't make it so. The Chevy pick-ups (even the new ones) look just like the Chevy Suburban my Dad bought in 1976.

  • Report this Comment On April 28, 2013, at 7:26 AM, stevema1 wrote:

    When I stated my company I bought a brand new Chevy G-30 van the heavy duty one and that was the biggest piece of crap I ever owned. It was in the shop more than on the road. And to think it was a choice between that and the Ford, but at the time there was a strike (car unions are so good for striking so they get more toilet paper to wipe their cracks with) and the rear ends were not available. SO I got stuck with this piece of garbage.

  • Report this Comment On April 28, 2013, at 7:39 AM, roadtravlr wrote:

    This is another one of those LEFT wing,misleading articles to try and foll the public. Where do these people get their degrees?

    The title says Silverado is No.1,yet,this hasn't even happened yet.

    This is FIRST GRADE journalism at it's finest.

    FORD Rules the market,and they know it. Plus,NO bail out money for FORD. That in itself,shows class.

  • Report this Comment On April 28, 2013, at 8:41 AM, lem2004 wrote:

    Boy the GM haters are out today.Aren't any of you smart enough to know that Dan meant the truck was number one as far as importance to their bottom line? You know like profits.@ boobut,Maybe you are the foolish one.

  • Report this Comment On April 28, 2013, at 9:01 AM, notsoblind wrote:

    Chevy trucks are not bad vehicles,but their front suspension sucks.

    They are the only manufacturer that puts their tie rod ends between the control arms,which makes it a lot harder to work on and align..

    And i have the scars to prove it..

  • Report this Comment On April 28, 2013, at 9:13 AM, BuyAmerican40 wrote:

    The title has people talking!! You hit the nail on the head lem2004 because that is what the title meant that this is the #1 biggest launch for GM post bankruptcy. Growing up all my life all we have owned was GM products and have had nothing but great success with them. You guessed it I grew up in a GM family but my family also works for Ford and Chrysler to. I am a GM worker and supporter all the way.

  • Report this Comment On April 28, 2013, at 9:26 AM, drozet wrote:

    cannot wait to get out of my subscription. continue to see articles that are written by inexperienced people that have no idea what they are writing. headlines are of no value and are just used as attraction gatherers. this is not what i had in mind.

  • Report this Comment On April 28, 2013, at 9:41 AM, gallajj2012 wrote:

    It's obvious you're a Chevy fan boy. And why Yahoo is posting your articles in the first place has me wondering. Your articles are more appropriate for blog posts. Your title is misleading; are they number 1 or not. BTW, what do you drive?

  • Report this Comment On April 28, 2013, at 9:44 AM, gallajj2012 wrote:

    ****Yes, GM recalled slightly more vehicles in 2012, yet if you combine all recalls since 2010, GM has the least of any major automaker. While both have had very few in comparison to Toyota and Honda. Toyota more than tripled GM's number of recalls.****

    Im going to go out on a limb here and say GM has had some of the lowest new car and/or updates than most other manufacturers. Ford and Chrysler on the other hand have several new-car intros and/or updates.

  • Report this Comment On April 28, 2013, at 10:58 AM, imDanielle2 wrote:

    I love it how Ford idiots keep pretending the F150 has been the number one selling truck for all these years.. It is very easy to go and see that "GM" has sold more half tons than any other truck since the 50's but since they have one truck that is built under two different badges "Chevy/GMC" .. Ford keeps trying to say their truck outsells the "Chevrolet" brand.. Truth is the General Motors half ton sales nearly doubles the sales of the Ford F150 .. But you keep telling yourself that the Ford is the number one selling truck.. What ever makes you sleep better at night.. LOL

  • Report this Comment On April 28, 2013, at 11:17 AM, 50rocks wrote:

    chevy can't seem to develope any power, as in to get the power of the ford 5.0 you have to step up to chevys 6.0. Also cevy doesn,t offer the rear-ends in low enough ratios to use whatever power they can come up with, not to mention the only half-ton with drum brakes

  • Report this Comment On April 28, 2013, at 12:41 PM, Squadman33 wrote:

    Government Motors is trying hard....My bitchin cool 08 F 150 was made by an American company who did not need a federal welfare check life Government Motors did. I respect that.

  • Report this Comment On April 28, 2013, at 1:32 PM, Expert01565 wrote:

    Your all pretty stupid if you don't see the reason GM and Ford are number 1 and 2, They are the biggest fleet queens, now if you took that away, Neither ford or GM would be in the TOP!! All you GM fan boys or you Ford fan boys need to check your facts, Yes ford is the Number selling truck because of its fleet status just like GM, and just because GM and Ford sell more does NOT mean there better..lol FOOLS

  • Report this Comment On April 28, 2013, at 1:33 PM, Expert01565 wrote:

    And by the way Ford Credit took the biggest bailout..lol look it up do some research!!

  • Report this Comment On April 28, 2013, at 3:11 PM, TMFTwoCoins wrote:

    @expert01565

    Don't be silly. All automakers are very similar in fleet sales. http://www.allpar.com/news/index.php/2012/02/chrysler-fleet-...

  • Report this Comment On April 28, 2013, at 3:25 PM, clutch1958 wrote:

    If you subtract all the GM vehicles in the government motor pools, GM wouldn't be number one.

    Pretty good trick-get a government bailout, then sell your vehicles to the government.

    Tell me again how GM paid back their government money.

  • Report this Comment On April 28, 2013, at 5:01 PM, kapper692 wrote:

    I would take the Ford first but I would rather have a sexy truck, the RAM. Thanks

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