Something's Going Right for General Motors Company

Other automakers saw their car sales struggle, but the well-regarded Chevy Impala posted big sales gains last month. Source: General Motors Co.

General Motors (NYSE: GM  ) has been the subject of a lot of tough news stories lately. But here's a bright spot: GM's U.S. retail sales were up 7% in March.

GM's overall sales were up 4%, as a planned reduction in sales to rental companies dented GM's fleet sales totals. But GM said on Tuesday that it had gained retail market share, and several of its key product lines posted strong results.

A stronger than expected month for GM's pickups
GM's new pickups, the 2014 Chevy Silverado and GMC Sierra, have sparked a lot of discussion among analysts. On the one hand, the new trucks are strong contenders in the category. But GM's insistence on keeping incentives low has cost the company sales, particularly at the lower end of the market.

Chrysler has been seen as the key beneficiary of GM's stinginess, and sales of Chrysler's Ram pickups surged 26% in March thanks in part to aggressive discounting. But GM held its own. With a big incentives-and-marketing push behind Chevy trucks, sales of the Silverado rose 14% in March -- and sales of the (generally higher-priced) Sierra rose 23%. 

The 2014 GMC Sierra posted big sales gains in March. Source: General Motors Co.

So, did GM simply jack up its discounts? They did, but they appear to have done it carefully: GM said on Tuesday that its average transaction prices were up over $3,800 from a year ago, and that their per-vehicle incentives averaged 10% of average transaction prices, below the industry average 10.3% according to J.D. Power.

We watch the pickup market closely because no products are more important to the Detroit automakers' earnings. Pickups sell in huge volumes and generate significant profits; while GM is not quite as dependent as rival Ford (NYSE: F  ) on the health of the U.S. pickup market, the Silverado and Sierra are still arguably the company's most important products.

in contrast to some rivals, GM's cars sold well, too
But GM had more than pickups going for it in March. Despite a crush of tough publicity stemming from GM's ongoing recall issues -- and despite subdued car sales at some of GM's key rivals -- GM's car sales were solid. Overall sales of Chevrolet cars were up 10%, with the subcompact Sonic (20% sales increase) and the big Impala (103% increase) especially strong.

Several of GM's premium cars also did well. The Buick Regal posted a 52% increase, and the much-acclaimed Cadillac CTS saw sales rise 11%. 

The all-new 2015 Cadillac Escalade began arriving at dealers last month. Source: General Motors Co.

As we saw with both Chrysler and Toyota (NYSE: TM  ) , SUV sales have been especially strong lately. GM didn't miss out: The Cadillac SRX crossover posted a 37% sales gain. Sales of GM's big SUVs -- the Chevy Tahoe and Suburban, and their upscale cousins -- were up 62%. GM is in the process of rolling out all-new versions of the big SUVs, and selling off the last of the old models.

So, does a good month for sales mean everything is OK at GM?
It means that GM's recall woes appear not to have done much harm to its sales last month. I'm not sure it means anything more than that -- at least not yet.

None of GM's current vehicles are affected by the ignition-switch defect that is blamed for 13 deaths. I think many people understand that the problems with those switches happened before GM's bankruptcy and restructuring, when it was a substantially different company.

CEO Mary Barra's response to the crisis -- offering apologies and promising a transparent investigation -- has so far been on point. As long as that continues, I think GM will be able to escape lasting damage.

But just a few months ago, when Barra first took over as CEO, GM was a company on the rise. Its products and prospects and finances were all improving. The U.S. government had sold the last of its stock, and it had the industry's first female CEO. GM's prospects seemed to be brightening because its story at that moment was a good one.

The story right now is different. As long as that continues, it's going to be hard for GM to draw attention to the good things. If it continues for more than a few months, GM's sales seem likely to suffer. Stay tuned. 

Everything you need to know about Obamacare
Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This FREE guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.


Read/Post Comments (3) | Recommend This Article (1)

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 01, 2014, at 9:08 PM, funfundvierzig wrote:

    "CEO Mary Barra's response to the crisis -- offering apologies and promising a transparent investigation..."

    Hardly. With condescending arrogance, today she refused not only to make the report public, but would not even promise a copy of the full report to investigating Congressmen and Congresswomen. The dissimulation and massive cover-up continues!

    …funfun..

  • Report this Comment On April 01, 2014, at 9:09 PM, funfundvierzig wrote:

    "Transparency" at General Motors is an April Fool's joke. …funfun..

  • Report this Comment On April 02, 2014, at 1:58 PM, TMFMarlowe wrote:

    The report isn't done, and Congresscritters like to see themselves looking apoplectic on TV. Give it time.

    John Rosevear

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2899084, ~/Articles/ArticleHandler.aspx, 9/17/2014 11:54:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement