The 2014 Corvette Stingray Steps on the Gas

The 2014 Corvette Stingray (Photo: GM)

The Chevrolet Corvette has been an American icon for more than 60 years, and it's a "halo car" for General Motors (NYSE: GM  ) . Despite having been one of the most recognizable cars in the GM arsenal for decades, the Corvette has been updated relatively infrequently.

Naturally, when GM announced that it would deliver a new Corvette for the 2014 model year, many fans were very excited. For the new 7th generation Corvette lineup, GM opted to revive the "Stingray" name, which had been dropped in the 1970s. GM also made some major changes to the interior and exterior -- and so far, reviewers have been blown away.

The 2014 Corvette Stingray's interior has a more luxurious feel than previous versions (Photo: GM)

As the first new Corvette to arrive since 2005, the 2014 Corvette Stingray was almost certain to have strong initial demand. The car's great reviews have further bolstered its appeal . As a result, the new Corvette has gotten off to a strong early sales pace.

Corvette sales soar
The Corvette has not been a big seller in recent years. With persistently slow economic growth and relatively high gas prices, many car buyers have shifted toward more practical cars. In 2011, GM sold just 13,164 Corvettes. Last year was not much better: the company sold 14,132 Corvettes in 2012 .

Through the first nine months of this year, sales slumped again, and GM sold just 7,830 Corvettes . But the 2014 Corvette Stingrays started to arrive on dealer lots in September and October, and the result was a monster sales month: GM sold a stunning 3,929 Corvettes in October .

This stellar performance should continue for the next several months, if not longer. GM is still working to build up inventory of the 2014 Corvette Stingray, and some dealers may not have received any of the new models yet. Furthermore, the convertible version will not go into production until near the end of the year. For each version, it will take at least a few months to meet the pent-up demand.

A profitable niche
No matter how strong the demand is for the 2014 Corvette Stingray, it will never produce the same sales volume as the affordable cars in the Chevy lineup like the Cruze and Malibu. The Corvette will always be a niche product.

However, it's a very profitable niche. The starting price for the 2014 Corvette Stingray is over $50,000 , and the price can easily sail above $70,000 for the more capable and higher-option versions. GM North America President Mark Reuss has stated that the Corvette "makes as much money as any of the top-profit models in our company."

That suggests that GM could be earning $10,000 or more in gross profit (before counting development costs) for every Corvette it sells. When the company was selling just 10,000-15,000 a year, this still did not add up to much in the grand scheme of things.

However, based on last month's sales pace for the 2014 Corvette Stingray, GM will sell 10,000-15,000 this quarter. Even if demand tapers off over time, GM will still probably sell at least 30,000 Corvettes in the next year. Due to the product's hefty profit margin, this significant sales bump could move the needle for GM's companywide profitability, which has lagged that of Ford Motor (NYSE: F  ) .

Driving foot traffic
While Corvette enthusiasts are sure to be pleased about the arrival of the 2014 Corvette Stingray, the car has a secondary purpose for GM. As noted above, it serves as a "halo car" for the Chevrolet brand.

As Chevy dealers start to build up inventory of the new Corvette, having a flashy new sports car in the showroom or on the lot will hopefully attract more visitors to the dealerships. Most of the extra visitors may not be particularly interested in buying any Chevy vehicle. However, having the additional traffic gives sales reps plenty of motivation to chat up potential customers and try to sell more cars and trucks. In this regard it helps that Chevy has an increasingly competitive portfolio of affordable cars.

Foolish bottom line

The new 2014 Corvette Stingray is off to a fast start in the U.S. At October's pace, GM will sell more Corvettes in the last three months of the year than it did in the first three quarters! The jump in Corvette sales could provide a noticeable bump to GM's bottom line, because they are among the most profitable cars it makes.

Furthermore, as new Corvettes arrive on dealer lots, they should pull more people onto the showroom floor, giving dealers an opportunity to boost sales of other GM models. This -- along with the recent launch of GM's new full-size pickup trucks -- should make for a strong Q4 at Chevy dealers across the U.S.

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Read/Post Comments (8) | Recommend This Article (4)

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 November 10, 2013, at 3:10 AM, mso88 wrote:

    Dealers should provide hefty cash rebates to Corvette buyers as reimbursement for the public's GM/ Union bailout.

  • Report this Comment On November 10, 2013, at 1:21 PM, Duugan wrote:

    I own a 2004 Corvette C5. My concern would be repair parts. Right now, dealers state that you should use original GM parts; however, the cost can be outrageous. The relief is that there are other sources of the same GM parts for half the cost; yes, original GM parts!

    Recently, the CEO of GM went on air and announced Chevrolet parts will now be made in China. Really? Half of the stuff we get from China today is crap! A second note would be: if parts are now going to come from China, are the prices for the parts going to be the same for us consumers now that they will be manufactured for 4 cents on the dollar?

  • Report this Comment On November 10, 2013, at 1:35 PM, moneyriot wrote:

    The far right wing nuts take anything and make it an anti Obama and government diatribe. The bailout of GM and basically THE ENTIRE AMERICAN CAR INDUSTRY was and is a good thing. GM is not the only business or industry to be bailed out.

  • Report this Comment On November 10, 2013, at 3:07 PM, Heff1980 wrote:

    Ummm Corvette is a 45-65 yr old tool car. No one that likes class, sophistication and is a distinguished man would buy an upgraded camaro or mustang.

  • Report this Comment On November 10, 2013, at 5:06 PM, Jason87467 wrote:

    If you don't know how much profit GM makes on each Corvette and you don't, how can you say it's one of GM's most profitable product?

  • Report this Comment On November 10, 2013, at 7:43 PM, TMFGemHunter wrote:

    @Jason87467: As I noted in the article, GM's President of North America stated that the Corvette is as profitable as any of GM's vehicles. If you think he's lying, take it up with him.

    Adam

  • Report this Comment On November 10, 2013, at 9:25 PM, bbgirl65 wrote:

    I would have been able to order the new Corvette if I didn't listen to the recommendations from this site. It will take years to make back that money.

  • Report this Comment On November 11, 2013, at 9:04 AM, stevester wrote:

    the 2014 is a pretty nice car but I still think the 2013 "427" is a much better car for the money. Its an "Anniversary Edition" and has 427ci motor for the first time in quit a while.

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