General Motors (NYSE:GM) went after old rival Ford (NYSE:F) and its crown jewel F-150 pickup in a big way last month. In a tough series of ads, GM argued that the aluminum body panels on Ford's F-150 pickup won't hold up like the steel panels used on the F-150's archrival, GM's full-size Chevrolet Silverado pickup.
The result? Sure enough, the Silverado gained market share in June. But here's the surprise: So did Ford's trucks.
GM took a tough shot at Ford's new F-150
First, let's take a look at the GM ad campaign attacking Ford. As you'll see, the gloves are off.
As my Foolish colleague Daniel Miller noted last month, this three-minute spot is running in about 2,400 movie theaters around the country. GM has been running shorter versions of this ad in a slew of spots across NASCAR, MLB, NHL, and other sports programming. In key pickup markets like Texas, GM is also backing up the TV spots with a print-ad campaign.
So how did this June blitz work out for GM's Chevy Silverado? Results were mixed: While overall Silverado sales fell 3.7% in June versus June of last year, the Silverado's share of the U.S. full-size pickup market rose from 25.1% in May to 26.7% in June, according to figures compiled by Automotive News.
But Ford's F-Series line also gained market share. The F-Series, which includes the F-150 and its Super Duty siblings, took 38.1% of the market in June, up from 37.5% in May.
Who won? It depends on who you ask
It's probably easier to say who lost: While sales of Fiat Chrysler Automobiles' (NYSE:FCAU) Ram pickup line rose 14% last month from a year prior, the Ram lost a bit of market share from May to June, as did Toyota's Tundra.
As for Ford and GM, we should note that both offered a whole bunch of qualifiers and asterisks on their own (and to some extent, each other's) June performance.
For starters, Ford's F-Series posted an eye-popping 29% year-over-year sales gain in June. But short supplies of the then-new F-150 were holding back Ford's truck sales in June 2015, so the comparison is atypically favorable. Additionally, Ford has started selling down its 2016 Super Duty trucks in order to clear them out of dealer stocks before the redesigned 2017 models arrive, which might have boosted its June numbers somewhat.
On the flip side, GM was taking full advantage of Ford's supply shortages a year ago, selling lots of Silverados. That made for a difficult year-over-year comparison for GM last month. But GM noted that average transaction prices on the Silverado and its GMC Sierra sibling were up $3,300 from that year-ago month, making the point that the company is still booking a whole lot of profit from its pickups. GM also hinted that tight supplies might be holding back its own sales right now, and said it planned to boost production of the trucks in the second half of 2016.
Many pickups are sold to commercial fleets. That's good business (in fact, GM's ads may resonate with fleet buyers). But retail sales often generate higher profit margins, and GM CEO Mary Barra has made a point of focusing on the company's retail gains. GM officials citing J.D. Power data noted that the Silverado gained 1.9 points of retail market share (to 27.7%) from May to June, while the F-150's retail share fell 0.7 points to 34.5%.
Ford, meanwhile, said that its retail sales volume was up 41% from a year ago.
What it means for Ford and GM investors
For those who own Ford or GM stock (I own both), it's good news no matter who you think won the pickup battle in June. Full-size pickup trucks are exceptionally profitable products, even with the fat incentives that are now standard in the business.
There are signs that the market for new vehicles in the U.S. may be peaking (in fact, GM's decision to resort to an aggressive ad campaign to boost market share might be one of those signs). That's a concern for investors. But it shouldn't obscure the fact that both companies are selling a whole lot of these very profitable products right now, and that bodes well for second-quarter profits.
John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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