Why General Motors Is Putting the 2014 Chevy Silverado on Sale

This past winter hasn't been kind to the 2014 Chevy Silverado. Sales of GM's new pickup are down, and big new discounts are on the way. Photo credit: General Motors Co.

Is General Motors (NYSE: GM  ) giving up on its new 2014 Chevy Sliverado already?

Not likely. But GM is cranking up the discounts on its new truck, at least for the month of March.

Trade publication Automotive News reported this week that GM is planning a huge national promotion for March, in which it will offer big discounts on nearly all Chevrolet models -- including the all-new Silverado pickups.

These pickups were all new less than a year ago. They were designed from the ground up to be more profitable than the trucks they replaced. The new Silverado was supposed to be one of the cornerstones of GM's global push to boost its profitability. 

These trucks were supposed to be good enough to sell without big discounts. And so far, they have: GM's pickup incentives have been lower than most rivals' in recent months.

But now? GM is about to offer some big new discounts, and that's raising concerns.

March is apparently "Truck Month" for Chevrolet
According to the Automotive News report, GM's plan is to stage a major advertising blitz around a "Truck Month" promotion for the month of March. GM has apparently told Chevy dealers to expect an "unprecedented promotional assault," according to the report.

During "Truck Month," Chevrolet Silverados -- and nearly every other Chevy model -- will be available to the public at "supplier pricing," the deeply discounted prices that GM offers to employees of its suppliers. (Only the Corvette and the limited-production SS sedan are excluded.)

GM's "supplier pricing" is equal to the dealer invoice price, plus destination charges and a $150 fee. That's the biggest discount GM has so far offered on the new Silverado.

Why are they doing this? We've heard so much from GM about how the company is determined to be disciplined with its incentives from now on. GM has insisted that it is absolutely focused on improving both its profits per vehicle sold as well as its vehicles' resale values, even if it costs them some sales.

Both of those goals are undermined when discounts get boosted. So what's going on?

Sales are down and inventories are rising
Officially, GM won't comment on any of this. But unofficially, we know that the last couple of months have been rough ones for a lot of automakers. Not just GM, but rival Ford (NYSE: F  ) , Toyota (NYSE: TM  ) , and others as well. All have suffered from the weather; heavy snow and severe cold in many parts of the U.S. have kept car shoppers away from dealerships.

Overall, GM's sales were down 12% in January, but sales of the Silverado were down more than 18% versus sales in the year-ago month. To some extent, that's explained by recalling that GM was blowing out the last of its old-model pickups a year ago. The discounts were huge back then, as were the sales totals. It makes for a tough comparison

Sales have been subdued, though. And now is estimating that GM's sales fell another 5.4% in February. (We'll know for sure when GM reports its monthly sales on Monday.) 

But while sales have been subdued, North America's auto factories have continued to crank out new cars and trucks. That means that inventories are rising. As of the end of January, GM had a 114-day supply of new vehicles. (60 days' worth is considered optimal. Inventories often rise in the winter, but over 100 days is cause for concern at any time of year). And GM isn't the only automaker with this problem.

That has led some analysts, including your humble Fool, to worry that a price war could break out as automakers compete to clear out the rising backlog of new vehicles. That would be great for car shoppers, but bad news for investors: A price war would erode industry profits all around.

Is a rebound on the way?
Officials at Ford have expressed confidence that sales will rebound once the weather improves, and high inventories will fall on their own as the year progresses. That sentiment is shared by some third-party observers, including Edmunds senior analyst Jessica Caldwell. Caldwell told me on Friday that she thinks demand for new vehicles will likely be strong once the weather improves. But, she cautions, it's not a sure thing.

GM hasn't said much either way. But this big new sales event suggests that they're starting to get concerned. It's possible that this event will simply drop GM's inventories enough to put the company in position for a strong spring once demand rebounds.

But it's also possible that we're seeing early signs of a problem, one that could do some damage to GM's bottom line. Stay tuned.

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  • Report this Comment On March 02, 2014, at 2:25 PM, chronarch wrote:

    The new trucks look old with the huge chrome grill, have ugly square wheel wells and lack rear crew cab AC vents. No thanks GM. You missed the boat on this one.

  • Report this Comment On March 02, 2014, at 2:34 PM, RickJWag wrote:

    GM chose to repay their government buddies with a left-leaning marketing mantra.

    Personally, I think it's a bad idea. Pickup trucks make sales in red states, not blue states. Liberals don't tend to drive domestic vehicles in general.

    But let's give it some time and see.

  • Report this Comment On March 02, 2014, at 2:34 PM, kurgun wrote:

    I think people just don't want a huge truck anymore. Why they stopped making s10's and sonoma's is beyond me. Try looking for a s10 or sonoma now and when you find one, by the time you express interest in it, it's sold. I think where they're missing the boat is on smaller trucks not these big ones. With the cost of gas still too high, they won't move many of those trucks, all the power options in the world just equal more electrical and computer problems in the future. Whatever happened to a vehicle that got you from point a to point b, and everyone got alone fine without all the power options? Power options are the means they use to offset the cost of steel, options cost nothing to produce, they are there to make the car or truck sell for a higher price, but in the long run you will pay for all the work you will need done with the computers, plastic cheap parts, and when the electronic components give out on the vehicle that you must have that was 40k or more. Until they perfect those systems, I wouldn't pay that high of a price for any vehicle.

  • Report this Comment On March 02, 2014, at 3:01 PM, mrgreenjeans wrote:

    their trucks aren't tough anymore they are sissified with every imaginable high tech gizmo there is the styling on these trucks is god awful looking plus reliability issues and jacking the prices to 40-50 thousand doesn't help their commercials on chevy trucks are a laugh one commercial playing on how quiet in the cab they are Ha yea gotta be a tough truck to do that ,Ford and Ram have got commercial ad's figured out they show their trucks working pulling loads and looking tough compared to chevy that all they have is a vehicle that looks like a truck

  • Report this Comment On March 02, 2014, at 3:46 PM, bcweir wrote:

    You people are ridiculous the way you inject politics into commodities. What's next? Are you going to tell me that you don't eat a certain foods because you're a [fill in your favorite political label here]?

    It's a freaking TRUCK, people, and they're built exactly the same no matter where you are from or what side of the aisle you sit on.

    For those of you who don't want electronics in your vehicle, you must have missed the radio delete option on the order form. That and a lot of that electronic stuff is mandated either by the market or by the government - but you're going to blame GM anyway? You're actually going to skip the WHOLE vehicle just because you don't want a radio or navigation? SERIOUSLY? Obviously GM isn't marketing to MORONS, and that's a plus in their column!

    I'm no fan of GM either, but come on!

    You people are even blaming GM for the sun coming up!

  • Report this Comment On March 02, 2014, at 3:49 PM, bcweir wrote:

    By the way, Krugun, you must have been sleeping under a rock since 2004. That's when the S-10 and Sonoma were replaced by the Colorado and Canyon respectively. A new Colorado and Canyon is coming in 2015.

  • Report this Comment On March 02, 2014, at 4:12 PM, cityperson wrote:

    We need a truck like the Ford Ranger , S-10 Colorado not thes e oversized gas hogs. Most of the construction people do not even need a truck of this size, but some to look tough, I guess. Toyota is making a killing off th American peoipelon thier small truck, I for got Neisons small pick up.

  • Report this Comment On March 02, 2014, at 4:35 PM, LungsOfSteel wrote:

    Once again, the clueless GM-haters prove their cluelessness. This isn't about politics, folks, no matter how much rhetoric you wish to inject.

    Your level of cluelessness makes the Fool look like Detroit insiders in comparison.

  • Report this Comment On March 02, 2014, at 5:00 PM, chaircitydude wrote:

    MR Greenjeans, your post makes me laugh. You say their trucks aren't tough because they have every high-tech gizmo.....Ford are the ones that started with the whole SYNC thing, the others naturally had to follow suit.And they've had many issues with Sync and MyFord Touch. BTW, isn't Ford the only of the domestics to offer stuff like cars that self parallel park, and hatches that open by swiping your foot under the bumper? They're the king of gizmos. And bashing GM for hyping the quietness of their trucks...I've seemn many ads where Ford is bragging about fuel economy in their F-150....

  • Report this Comment On March 02, 2014, at 5:00 PM, Jason87467 wrote:

    The brainwashed Ford fans are out, again. Chevy makes the best truck, no doubt about it!! Ford is even just rated 3rd on Consumer Reports wake up folks!

    The best thing Ford has is hype generated by its ads with the media eating it all up.

  • Report this Comment On March 02, 2014, at 5:02 PM, chaircitydude wrote:

    And Chronarch..."the trucks look ugly with huge Chrome grills.." Because, as we all know, the Ford Super Duty has a very small, understated grill,

  • Report this Comment On March 02, 2014, at 5:09 PM, dwduke wrote:

    Poor GM, they missed it again. The grill looks like Mick Jagger's or Steven Tyler’s lips. Ugly. The truck has no soul. GM just can't get it. The Impala looks better than the last one, but GM is going to miss out on profits again for the year. GM used to make cars and trucks Americans clamored for. They are also weighed down by a humungous pension obligation to union retirees. They dump that, they will have a better chance of making profits, but still they need to do some soul searching, and ask the customer what they want in a GM made truck and car.

  • Report this Comment On March 02, 2014, at 5:14 PM, TimFeatherston wrote:

    I used to hate Chevys/GMC's I like Ford s and the dodge series. Now I drive a Sierra for my company truck. It is a great truck. I think there is little difference between the three as far as quality goes. the rest is just preference s and Being brought up either Ford or Chevy. The big difference, at least around here, is the dealerships. The ford dealers are more willing to deal and are more reasonable on their prices. The Chevy dealers act like they are doing you a favor to sell you a vehicle

  • Report this Comment On March 02, 2014, at 5:19 PM, gramdonna wrote:

    general motors is wrong to buy now! Even the dealership that sell thier products are not any good! General motors is not that loyal to thier customers! They pick and choose who they want to help. The president says one thing dan ammen and then does not follow thruogh it! He has so called specialist that say that are not allowed! They have let dealrship btraking the lemon law, and general motors and chevy will not fix the problem. hubler chevy indiana has sold a wrecked 2013 car that was supposed to be beand new General motorschevy knows about it. Dan ammen said they will do what ever they can to replace it, but them he has other like victoey says no! but they gave a brand new camaro in ga a camaro when a dealership wrecked it, it was also a 2013. with no problem. So the truck that is discount is no good

  • Report this Comment On March 02, 2014, at 5:19 PM, TimFeatherston wrote:

    Dealers are also to blame because they do not stock vehicles with low level options. then because no one wants to wait to have one shipped or built they buy a used one and GM , Ford and Dodge say no one wants them. They did this with the Rangers and Colorados. They kept adding more and more options making them more and more powerful ,thus making them as expensive to own and operate as a full size so people stopped buying them

  • Report this Comment On March 02, 2014, at 5:20 PM, mrgreenjeans wrote:

    well chaircitydude your so smart tell us all why chevy can't sell their overpriced white elephants then? btw I have owned every body style chevy truck has produced since the late 50's and they were the best trucks made but now I'm not so sure

  • Report this Comment On March 02, 2014, at 6:33 PM, rocsoe wrote:

    Every day's a sale day at a retailer. So long as the door is open, they are on sale. They're way overpriced no matter how they want to slice it.

  • Report this Comment On March 02, 2014, at 7:07 PM, masaerati123 wrote:

    I think GM is panicking because Dodge Ram just pre-sold all of it's 8000 Dodge Ram1500 Eco Diesel whuch give 25 MPG.Dodge did make best pick-up 2 years in a row,so this will definitely be reason for concern.The Dodge is the better truck.

  • Report this Comment On March 02, 2014, at 7:19 PM, McSniperliger wrote:

    People confuse the Colorado/Canyon to be in the same class as the S10/Sonoma. They are one class up from them. Its considered a mid-sized truck, same class as the Dodge Dakota. S10/Sonoma, Ranger, Tacoma, Frontier, etc are in the 1/4ton class. Colorado/Canyon, Dakota are in the 1/3ton class.

    Its a difference in towing/hauling capacities. The Ranger was dropped because Ford was shutting down the Twin Cities Assembly Plant, for the reason that the Ranger plant would have to be retooled to meet new emissions and safety requirements. Top of that about the same amount of money you could have an F150 XL model with a V8. The final model year of the Ranger was 2011.

    If Ford had put in the 302 in the Ranger, I bet sales on those would have gone up. Or even brought back a better more powerful diesel, unlike the under-powered Isuzu and Mitsubishi diesels they offered in the 80s.

    GM really made an ugly truck this model year. They kept the God-awful square wheel wells, and really the ride isn't that comfortable. All new vehicles though no matter the make are a bit over priced, by at least $2,000 or so. Bring back the manual transmission.

  • Report this Comment On March 02, 2014, at 7:27 PM, fool4u2 wrote:

    A whole lot of truck buyers are sole proprietors and small businesses, and the ones that work for them. These are also the ones being hit the hardest by ObamaCare.

    When a person's health insurance goes from $150 a month to $450, then there goes their car payment.

    Its not going to GM.

  • Report this Comment On March 02, 2014, at 7:48 PM, ddh1961 wrote:

    $40k for a decently-equipped new truck is pushing the boundaries of what folks in today's jacked up economy are willing to spend, especially when said truck is so ho-hum in design and engineering and still gets mediocre mileage with gas pushing $3.50-$4.00 a gallon.

  • Report this Comment On March 02, 2014, at 8:11 PM, madokie wrote:

    maybe because people remember 7 years ago loaded GM trucks were half price when GM was backrupt and taxpayers bailed em out, but now GM trucks are 40-50$K???????????? get real the best buy is a 2 year old truck in great cond, and every body knows it..GM is circling the drain.

  • Report this Comment On March 02, 2014, at 8:38 PM, kevink10 wrote:

    To the comments about the GM grills, it's all about engineering, look at Ford's, large grill also, why, towing capacity, tow more, you need more air flow to/thru the grill when towing to keep it cool, that's why they have the larger grills. Look up a pic of the Ford super duty, that grill is as big as your front door.

    As far as all the bells and whistles on trucks nowadays, it's what the customer wants, plain and simple, a bare bones truck on a dealer lot won't sell for months, which would you rather have, a truck with no resale value, or one that does ?

  • Report this Comment On March 02, 2014, at 8:56 PM, Lonetx wrote:

    We are at fault people. When the big 3 saw that we were so willing to pay 40 and 50k for a truck they had us. why does everyone need a truck? rarely do I see anyone with cargo or groceries, etc in the back of a truck. 35 yrs ago a guy wouldn't pick up a date in a truck much less a girl drive a truck to school like today. the trucks they are making now suck. look at a glance in any truck dealer on the line. how many of these parked trucks do actually "grab", your attention? if you pay attention they all blend in the same colors, whites, bieges, tans, pewters, black and yes again globs of whites, all very common colors, hardly a two tone color. mileage sucks on most of them, they all average 500-600 monthly plus 200+ insurance, total 800dollars just to drive a truck. look around you, 80 % on the road are trucks, that means we can afford 50k for one, so just take your licks!

  • Report this Comment On March 02, 2014, at 9:21 PM, DNB wrote:

    I really like the new Silverados, they're, in my opinion, far more attractive than the Sierras. All this poo-pooing of GMs past flaws are like so much useless water-under-the-bridge. I respect trucks for their toughness when dealing with our country's jacked-up roads. I can't wait to get my hands on a fully-loaded Silverado LTZ!!!

  • Report this Comment On March 02, 2014, at 9:46 PM, creekstride wrote:

    I am in the auto sales business and the answer is more simple...full size trucks are priced beyond the average person. A nice 1500 series 4x4 truck

    with 4 doors is $ 40,000 and up . That's a average payment of $ 800 or more a month. A family with 2 children , a house payment , light bill , groceries , insurance and car payment already, can not afford

    another 800 dollar truck payment so the pricing on trucks is beyond the market that buys them. Stop dreaming up options and expensive safety gadgets, you don't need, and lower the price.

  • Report this Comment On March 02, 2014, at 9:56 PM, AcuraT wrote:

    Not mentioned by John's column but very true - GM is showing signs of arrogance again. Producing too much product when there is no demand for the product at the price point it is offered at. These are good trucks, but were not a huge advancement over the last generation except they are nicer on the interior (in particular) and slightly more efficient. Emphasis on the "slightly." This is not a ground-breaking truck on any term. Ford is taking a bigger chance with an aluminum body saving 700 lbs. AND new engines. GM is highly concerned with that new launch that their new truck sales are going to crater even worse - no two ways about it. They are trying to save their trucks - these latest actions are a move not from strength but smelling a little like desperation with inventories rising. GM may have badly miscalculated here, and only time will tell if this is a limited error or if more are in the pipeline in the near future. Time will tell...

  • Report this Comment On March 02, 2014, at 11:23 PM, Jeffkory wrote:

    READ bcweir comment-- All you people need to take a chill pill and get a life- Go read his comment.

  • Report this Comment On March 02, 2014, at 11:24 PM, btc909 wrote:

    Chrome is the greatest go to for lazy design. Uh, UH what do I do, oh I know, chrome here, chrome there and so on.

    Expecting buyers to sign up for a 9 year payment to avoid paying over $600 a month will not elicit large sales numbers.

    Slightly better performance, a little more fuel efficient, a few more goodies offered is the typical auto makers formula. Throw that together in an ugly package with some previous parts bin parts with an even more bloated price leads to major discounts to move these off the lots.

    For 40K i'd better have 4 doors and a Diesel engine. For 50K i'd better have 4 doors, a diesel engine and some additional assist to boost fuel economy.

    Your jaw will drop once you hear the pricing for the Colorado & Canyon.

  • Report this Comment On March 03, 2014, at 9:37 AM, Jason87467 wrote:

    This writeup makes a fair analysis of what really is happening with GM. What I don't get is many in the media loves to pick on GM and will make GM look bad whereas when the competition does the same and nothing is said. The biggest enemy of GM is the news media. How that can be corrected, I don't know.

  • Report this Comment On March 03, 2014, at 10:18 AM, roxander wrote:

    they put it on sale so they can show a loss and turn to obama for another 50 billion dollars hand out and then they will divide the money up with the top executives and we the people get the shaft again.

  • Report this Comment On March 03, 2014, at 12:10 PM, PS75425 wrote:

    Maybe I missed the obvious comment ... they are just too dang expensive..."trucks" used to be trucks ... now not sure what they are ... some hybrid of truck and luxury car? ... I think GM needs to 1) de-content them and 2) significantly lower the price

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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