GM Beats Estimates as Pickup Sales Soar

It doesn't always look like it, but General Motors (NYSE: GM  ) is making progress in its long haul back from bankruptcy.

GM said on Tuesday that its U.S. sales were up 6% in June, with all four of its brands posting retail sales gains. That beat analysts' estimates, which called for an average 2.1% gain, according to Bloomberg.

The all-new 2014 Chevy Silverado has just started to arrive at dealers, and it's selling at a fast pace. Photo credit: General Motors.

Six percent may not sound like a big gain, and it's likely to have trailed the U.S. market's overall growth for the month. (We'll know for sure in a day or so.) But the numbers behind the headline tell a story that suggests that GM is finally on the right track in its home market.

Strong retail sales should drive profit gains
GM pointed out that its retail sales actually grew 14% in June, likely outpacing the overall market. Executives noted that GM's fleet sales were down because of the timing of deliveries of certain large orders -- they happened to have hit earlier this year than in past years.

Generally, analysts tend to like it when an automaker's fleet sales are down relative to retail sales, as,  generally speaking, retail sales are more profitable. But that's not the whole story: Rival Ford (NYSE: F  ) gets as much as a third of its U.S. sales from "fleet" business -- more than GM -- but its overall profit margins in North America are among the best in the business. What sometimes goes unnoticed is that a lot of Ford's fleet sales are to commercial customers, who are buying high-profit trucks and vans.

Many pickups are bought by businesses like building contractors, who may buy 10 or 20 or more at a time. That's good business to have, better than the low-margin rental car sales that many associate with "fleet" numbers. GM likely has been losing some of that business to Ford, because Ford's F-Series pickups have been more competitive (and more fuel efficient) than GM's outgoing models.

But that could change as GM rolls out its all-new 2014 pickups. Some of those have already reached dealers, and GM U.S. sales chief Kurt McNeil said on Tuesday that they are "turning" very quickly – spending just 10 days on dealer lots, on average. Overall, sales of GM's Chevy Silverado (both old and new versions) were up a very impressive 29% in June.

GM is currently selling a mix of old (2013) and new (2014) pickups, a situation that is likely to continue for several months as GM ramps up production and begins a big marketing push for its all-new trucks. The new trucks will be much more profitable than the outgoing ones. But profits on the 2013s may be better than expected: It's customary to boost discounts on outgoing models, but because of strong industrywide demand, GM hasn't had to do that with its remaining 2013 trucks.

New products driving nice gains, and likely increased profits
There were other signs of progress for GM in June. Like Ford, GM's much-improved small cars saw strong sales as consumers continued to seek out high-quality, fuel-efficient options. The compact Chevy Cruze had its best sales month ever, GM said, and both the subcompact Chevy Sonic and the Chevy Volt hybrid posted strong results.

GM's all-new Impala is posting strong retail numbers. Photo credit: General Motors.

Sales of the full-sized Impala were roughly flat vs. last year's totals, but that hides a nice success story. Last year's sales were of the outgoing model, a dated car that sold largely to fleets. The new Impala is a much nicer (and much more profitable) product, and GM has emphasized retail sales with success: Retail sales of the Impala were up 62% over last June's totals.

GM is also seeing more and more success with its Cadillac and Buick brands, as more of its much-improved new products hit dealers and gather steam in the marketplace. That's a story we're likely to be hearing again and again over the next year and a half, as GM's long-awaited new-product offensive has now shifted into high gear -- and GM's bottom line should show the results over the next few quarters.

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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 July 02, 2013, at 9:51 PM, guysisson wrote:

    Ford still kicked their butts. GM is building garbage vehicles since the bankruptcy.

  • Report this Comment On July 02, 2013, at 10:37 PM, metalmasterscm wrote:

    C an't

    H ave

    E very

    V ehicle

    R unning

    O n

    L uck

    E very

    T ime

    D ear

    O ld

    D ads

    G ross

    E xperiment

    G enerally

    M ade

    C heap

  • Report this Comment On July 03, 2013, at 8:04 AM, Jeffkory wrote:

    Good for Chevrolet- Maybe people are tired of fords not under warranty breaking down- I know I worked for ford for 16 years as a mechanic- They cut lots of corners to save a penny and don't listen to the repair people as to how to create a permanent fix. They just hope warranty runs out so the customer will pay. They been burning down homes for over 50 years.

  • Report this Comment On July 03, 2013, at 9:18 AM, PEStudent wrote:

    We need to shift the taxes for road, bridge, and other transportation maintenance from little old ladies property taxes and people's income taxes to the gasoline taxes. The federal and state taxes might end up as $1.50 each instead of 18.4 cents and an avg 35.4 cents, but it's not a tax increase, it's a tax shift.

    So those who a driving a heavy, road-wearing vehicle because they like the sound of the word "hemi" can pay their actual share of road maintenance.

    Only then, when gas is $6/gallon, will American traffic start resembling European traffic. The core EU countries did NOT increase oil imports since the early 1980's and raised their avg. income from 62% of the USA to 81%.

    Meanwhile, the USA got brainwashed with Ronald Reagan's vision of "we can use up all the resources we want" while he tore down the solar panels Jimmy Carter put on the White House.

    Our mpg actually went downhill from the early 80's under Reagan until the later 00's.

    I'm currently saving about $50 in gas for every 1000 miles I drive since selling my Ford Taurus for a 2013 Honda Fit automatic. American car manufacturers try to push us tall guys (I'm 6'3") into buying gas hogs by making subcompacts too short for our heads and with leg-cramping small doors. So I bought my first-ever foreign brand, with 40.4" of front headroom (1.8"-2.5" MORE than Ford Focus and Fiesta, Chevy Cruze, Buick Encore, Dodge Dart, etc.) and extra wide doors that are a pleasure getting in and out -front or back seats.

    My fit comfortably fits the same 5 passengers as the Taurus, yet is capable of hauling 2 living room-sized chairs at a time, a 4-ft file cabinet, bicycles, 8 ft lumber, etc. completely inside while being 3 ft shorter than the Taurus and getting 10 mpg more.

    People would know facts like that if we paid fair taxes for gasoline.

  • Report this Comment On July 03, 2013, at 8:03 PM, TMFMarlowe wrote:

    "My fit comfortably fits the same 5 passengers as the Taurus,"

    You've clearly never ridden in the back seat of a Taurus.

    John Rosevear

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