Why Ford's F-150 Still Dominates the 2014 Chevy Silverado

Last year, General Motors (NYSE: GM  ) rolled out a new generation of its full-size pickup trucks: the 2014 Chevy Silverado and the 2014 GMC Sierra. GM had been looking forward to this updated truck lineup for a couple of years, anticipating that it would be better able to compete with the segment leader, Ford Motor's (NYSE: F  ) F-Series. But so far, the new trucks aren't entirely living up to expectations.

The new 2014 Chevy Silverado hasn't driven sales growth for GM. Photo: General Motors

On the one hand, GM has been successful at boosting average transaction prices by promoting more expensive packages and remaining disciplined about discounts. This bodes well for the company's margins.

On the other hand, sales numbers have stagnated since the launch of the 2014 Silverado and Sierra. Ford has been able to win even more market share from GM in recent months through the use of targeted promotions on its 2013 and 2014 F-150 models.

GM truck sales stall
In the first eight months of 2013, when GM was still primarily selling the outgoing 2013-model-year trucks, the Silverado and Sierra posted big year-over-year sales gains. Through the end of August, Silverado sales were up 25.4% and Sierra sales were up 24% year over year for a combined sales increase of more than 90,000 units.

By the end of the year, the sales gains were much more modest. The Chevy Silverado closed out the year with a 14.8% sales gain for 2013, while the GMC Sierra finished up 17.3% year over year.

The combined sales increase for the full year was 89,306 vehicles. This means that all of GM's 2013 pickup sales gains came in the first eight months of the year. For the September-December period, GM pickup sales actually fell slightly compared to 2012.

No trouble in Ford-land
Over at Ford, pickup truck sales have remained very strong. Ford proudly announced last week that it has sold at least 60,000 F-Series trucks each month for eight consecutive months. In December, Ford sold 74,592 F-Series trucks -- more than 14,000 above the combined Silverado-Sierra sales total.

Ford F-150 sales have shown solid growth throughout 2013. Photo: Ford

While Ford lagged GM slightly in pickup truck sales growth through the end of August (with deliveries up 22.1%), Ford gained pickup market share for the full year with an 18.3% rise in F-Series sales. Ford's strong sales performance down the stretch and GM's stagnant pickup sales in the last four months of the year thus allowed Ford to increase its lead in the pickup segment.

Selling down inventory
It's important to remember that GM's decision to cut back on discounting is one of the main reasons that sales of the 2014 Chevy Silverado and 2014 GMC Sierra have been relatively slow. As my Foolish colleague John Rosevear pointed out over the weekend, this has been aggravated by Ford's use of big incentives to sell down its remaining 2013 F-150 inventory.

It's hard to blame GM's management for cutting back on discounts for the 2014 Chevy Silverado and GMC Sierra. Even without sales growth, improving average transaction prices for these trucks should help raise GM's earnings. Furthermore, Ford will soon be finished clearing out its 2013 inventory.

But it would be wrong to give GM a full pass here. Even if Ford will be done clearing its 2013 models soon, the 2014 F-Series is a transitional model. Ford will probably unveil the 2015 Ford F-150 at the Detroit Auto Show later this month, with an on-sale date later this year. The next-generation Ford F-150 is expected to be much lighter, and thus much more fuel-efficient, than the current model.

With such a big improvement coming in the 2015 model year, Ford is likely to provide generous incentives on the 2014 F-150 all year long. As long as Ford has enough inventory, it will want to give potential customers a reason to buy now rather than waiting for the improved 2015 model.

This means that GM could continue to face a choice between sales growth and margin growth this year. By next year, Ford's trucks will be the big new thing in the pickup market and the new Chevy Silverado and GMC Sierra designs won't really be so new. If GM wants to gain ground on Ford during this round of the pickup war, it needs to make its move soon.

Foolish conclusion
So far, the introduction of the 2014 Chevy Silverado and GMC Sierra models have had a positive impact on average transaction prices for GM. By holding the line on pricing, GM should achieve solid margin expansion. But a side effect has been an abrupt halt to sales growth. After gaining nearly 25% in the first eight months of 2013, GM's pickup sales have declined slightly in the last four months.

Higher discounts at Ford have made it harder for GM to sell pickups at full price. But if GM's sales pace doesn't rebound soon, the company will need to consider boosting incentives. With new Ford trucks on the way later this year, GM has a fairly short window of opportunity to improve its relative position in the pickup market.

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Read/Post Comments (27) | Recommend This Article (23)

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 January 06, 2014, at 8:00 PM, allamfool wrote:

    A lot of pickup owners are rural, mostly conservative. Since the bailout of "Government Motors" there's bound to be backlash, especially among this demographic.

  • Report this Comment On January 07, 2014, at 8:49 AM, specstrum wrote:

    I am a lover of GM cars and trucks but I have trouble telling the new truck from the 13 so in my opinion it was down right stupid to make them look new.I don't use a truck for work so looks matter now I know they have greatly improved the drive train but the first thing you notice about a women then if you like you look deeper to bad GM doesn't know this

  • Report this Comment On January 07, 2014, at 8:51 AM, specstrum wrote:

    not to make them look new

  • Report this Comment On January 07, 2014, at 9:38 AM, Cpopp wrote:

    I've owned 5 GM trucks and the one I own today is a 2008 GMC Crew Cab Z71. My truck had a list price of $36,000 and it had about $7,000 in discounts and factory incentives. I like the new truck, but the list price has grown to $44,000 for the same tuck with the same options and the incentives have dropped to around $2,500. I'm not going to pay this premium for a truck that does the same thing my truck does today.GM can certainly hold their margins, but as long as they do I will be driving my 2008 truck.

  • Report this Comment On January 07, 2014, at 9:58 AM, Thumper68 wrote:

    GM would sell more trucks if there were not so darn ugly. There is no comparison with the F-150. Go to any big parking look and of course there will be twice as many F-150's. Compare the looks of the 2 sitting side by side and the reasons they are getting their butt's kicked by Ford will scream at you.

  • Report this Comment On January 07, 2014, at 10:57 AM, drsilver wrote:

    Cars and trucks have round wheels. Those stupid looking square wheel wells make the truck ugly. Chevy/GMC arguably has the best truck mechanically, but the ugliest truck styling ever. There used to be an ad campaign, "Don't buy no ugly truck". And, we don't!

  • Report this Comment On January 07, 2014, at 11:26 AM, goldendon wrote:

    seems like GM should spend more time and money into making a decent vehicle, instead all they do is deceptive or flat out untrue adds, IE best selling truck, we all know this is just not true.

  • Report this Comment On January 07, 2014, at 12:22 PM, snakdoc wrote:

    Chevy/GMC are too proud of their trucks. Prices are too high. Ford is my preferred truck, but were unable to get the price right. Best deal I found was on a 2014 RAM Big Horn Quad Cab,V-6. Lots of room, great ride, quiet cab and __ 22mpg__ around town

  • Report this Comment On January 07, 2014, at 12:41 PM, Rolland wrote:

    They don't really look any different. They look very nice though. At the auto show they had a concept Chevy truck that I thought was great but they didn't use it. Shame on Chevy and GM for that as I bet it would have pushed them over the top. Bet they do now.

  • Report this Comment On January 07, 2014, at 7:04 PM, nomad1956 wrote:

    FORD COPIED NISSAN & TOYOTA FOR YEARS ON THEIR BODY FEATURES. NOW TOYOTA TUNDRA IS A FREAKING FORD !! THE INTERIOR IS THE "EXACT" AS A FORD F-150 !! PRETTY SAD ON TOYOTA'S PART !! NEITHER THE TUNDRA OR F-150 RIDES SMOOTH !! BOTH ARE RUFF AS A CORN-COB EVEN WITH THE 20'S ON THE F-150 !! THE DOORS ON THE FORD SHUT LIKE METAL GATES !! LOUD !!

  • Report this Comment On January 07, 2014, at 9:05 PM, jeepshepard wrote:

    I wouldn't buy either a Chevy Silverado or a Ford-150, I'd buy a Toyota truck. I grew up in the 1980's with my family buying Chevy and Ford vehicles. They were horrible vehicles that were constantly in the shop. We have since switched to Toyota models, and have no complaints. If you make a good product, you don't need a government bail-out (ex: General Motors).

  • Report this Comment On January 08, 2014, at 7:13 AM, lem2004 wrote:

    @jeepshepard,You can't compare the 1980's cars and trucks that GM made with the new ones they are making now.They are as good or better than most of the other brands,including toyota.

  • Report this Comment On January 08, 2014, at 7:26 AM, guysisson wrote:

    The Ford is simply the better truck in every way. The proof is in the numbers. The Ford is clearly Americas favorite truck, they have sold more trucks than any other manufacturer for 37 years.

  • Report this Comment On January 08, 2014, at 8:58 AM, cg28 wrote:

    I don't think I've ever seen a negative Ford article on Fool.com.

  • Report this Comment On January 08, 2014, at 9:06 AM, tytitan wrote:

    I know why the Chevy's aren't selling, its the price. My friend recently purchased 2013 new Sierra; its list price was $38,000 and of course it came with GM's standard On Star, Sirius for 3 month but the extended cab is smaller on the inside than her previous Sierra , we measured and for the price you can get a Nissan Titan crew cab 4X4 with everything but the OnStar and have a v-8 engine, top of the line audio system ,power captain' seat, towing package, rhino liner, easy lift drop and lift tailgate, large power rear window and room to spare , so why buy GM. Oh and by the way my titan has 76,000 problem free miles, just oil change and change the tires.

  • Report this Comment On January 08, 2014, at 10:47 AM, TMFGemHunter wrote:
  • Report this Comment On January 08, 2014, at 10:51 AM, TMFGemHunter wrote:

    Price is definitely part of the issue with GM's new trucks. However, the whole point of redesigning the trucks was to be able to raise the price and thereby earn a better margin. Even so, GM's trucks are pretty much comparable to the F-150 at current ASPs (but not selling as well).

    If GM can't drive higher volume without discounting today, I think it will have even more trouble next year, when Ford's new F-150 will be on dealer lots.

    Adam

  • Report this Comment On January 08, 2014, at 3:45 PM, munjanja wrote:

    am in Africa, Zimbabwe in particular. I drive a Ford Ranger 2013 T6. It's magnificent, if not addictively orgasimic. I wonder why Ford does give us some of those huge American cars- right handed cars. We also want to live the American dream in Zimbabwe.

  • Report this Comment On January 08, 2014, at 3:52 PM, munjanja wrote:

    ..meant to say: i wonder why Ford doesn't give us those ones. Funny, an equivalent of those twin cabs can set you back by about $60 000. No service plan, no incentives, no Floor mats, no side steps, no bull bar, no anti-roll bar, no nothing....

  • Report this Comment On January 08, 2014, at 5:07 PM, Jim85035 wrote:

    A friend just bought a new Ford F150 and it was $10,000.00 off the MSRP. Could that explain why Ford is selling more trucks, they have $7,500.00 more in discounts than Chevy! Im not a rocket scientist like the editor there at Motley Fool

  • Report this Comment On January 08, 2014, at 6:52 PM, sportz1 wrote:

    I read somewhere that one of them, GM or Ford was going to introduce a CNG version in 2015. I have invested in a few companies like WPRT, CMI and PCAR and shortly I will throw some money at CLNE to round out this field as I feel that CNG and LNG will be the future of energy independence as far as transportation and electric generation. Whoever does it first in a pickup will win the game. 20 years ago when I worked for the Feds, our PWC trucks had been converted too CNG. Saved the Navy tons of money on gas and diesel.

  • Report this Comment On January 09, 2014, at 9:11 AM, mike19000 wrote:

    I would consider switching from GM to Ford but the ECO-Boost is a problem prone system. Also the GMC is a much better looking truck than the Ford.

  • Report this Comment On January 10, 2014, at 12:45 PM, mikempp wrote:

    GM's problem if you will call it that is they last so damn long, I have a 2002 GMC sierra that just turned over 200,000 miles and it still drives and looks like new. Almost bought a new GMC this year but they way mine is running I keep it another year or 2. Good luck with your ford, I doubt you'll get anywhere near the service out of it.

  • Report this Comment On January 10, 2014, at 3:17 PM, mikempp wrote:

    Wow, just like I suspected, maybe as a stock Ford is a buy, but as a consumer GM Chevy is the way to go, just checked out the NADA price of a 2011 GM Seirra and a Ford F150 XLT 2 wheel drive, the GM is worth $5,000 more. Someone said Toyota? Not only are you stuck with an orphan nobody wants it is worth even less! How many trucks does Toyota sell a year? 5,000? Like I said earlier, GM’s last too long might be the only problem with the product, the 2002 GMC truck I have now is just turning over 200,000 miles and it still looks and drives like new, almost bought a 2013 on closeout but decided I’ll drive this another year or 2 and then get a new GM truck. Even my old truck with 200,000 miles been offered $5,000, probably get more out of it. The management might not be worth investing in but are far as the quality of the product they far surpass anything else out there.

  • Report this Comment On August 12, 2014, at 5:51 AM, Lawyerfish wrote:

    Build quality and reliability are about the same across the big three and Toyota for full-sized trucks, but there are differences in comfort, usually with newer designs being smoother and quieter on the road.

    I just bought a GMC Sierra about mid-way up the model and options (SLE Doublecab 4X4 with 5.3 V8 and All-Terrain package) with an MSRP of $46,000. There was a promotion for "supplier pricing" (whatever that means) for military personnel (I'm a Reservist) that knocked about $3500 off, another $750 from USAA, another $750 for trading in a competitive brand (traded a 2012 Ram 1500) and $3000 straight rebate on SLE models. Its not $10K, but 8K incentive isn't bad.

    When these first came out incentives were few and far between, but then it was a brand-new model and early adopters will often pay a premium to get something unique. Ford has their new 2015 F-150 coming out any time now with aluminum body panels and a new smaller EcoBoost. I somehow doubt the incentives will be anywhere near the levels available now on the outgoing 2014 model, or even those of the GM twins more than a year in.

  • Report this Comment On August 12, 2014, at 6:00 AM, Lawyerfish wrote:

    As for the trucks themselves, The Ford is the oldest, with the chassis originating in 2009 as essentially a heavy refresh of the 2004-2008 model. In 2004 this was a cutting-edge truck, and it remains highly competitive today in terms of capabilities, but ride is choppy, the cabin noisy and the interior trim cheaper-looking and feeling than in Ram and GM's newer interiors.

    Ram did their last major release in 2009 with a mild refresh in 2013. They have the smoothest ride with their coil spring rear suspension, a very nice interior with a quiet ride. Large incentives on all except the new EcoDiesel make them a pretty good buy as well.

    The new GMs are a heavy refresh of the 2007 models and are fully competitive in terms of towing, power and fuel economy, are ever so slightly behind the Ram in ride, handle better and are as quiet as a good luxury sedan. I'm sure the new Ford will be better still as it should be an entirely new design.

    Toyota had a mild refresh this year on a 2007 design, and the Nissan is just ancient with a 2005 design that has seen very minimal attention. Nissan should have a competitive new truck with a diesel option next year.

  • Report this Comment On December 05, 2014, at 9:35 PM, GOGGER1 wrote:

    G ,M , HAS ALLWAYS BEEN A CONSERVATIVE CO, IT SEEMS THEY ARE MORE WILLING TO REMAIN THAT WAY THAN STEP OUT AND RELEASE A TRUCK THAT CAN COMPETE WITH FORD ! LIKE ROUND WHEEL WELLS FOR ROUND TIRES , COVERING THE FRAME THAT MAKES THEM LOOK LIKE THEY HAVE A BODY LIFT , THEY DONT SEEM TO GET IT ?? WITH OUT ANY QUESTION GM TRUCKS HAVE THE BEST DRIVE TRAINS ON THE PLANET , WHEN I ATTENED HOT ROD SHOWS 99% OF ALL THE RODS HAVE GM DRIVE LINES , BECAUSE THEY LAST FOREVER AND THEY INTERCHANGE FROM 1955 - 2015 , SAME BELL HOUSING ,, 4 CLY C K , 6 CLY 63 N UP, 8 CLY , SMALL BLOCKS BIG BLOCKS , PEOPLE WANT NEW FORDS BUT USED CHEVYS ,

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