General Motors (NYSE:GM) said that its U.S. sales rose 4% last month, on strong sales of its most profitable products: crossovers, large SUVs, and pickups. Its retail sales rose 5% from a year ago. 

GM's sales gain outpaced the overall market's 1.1% decline, and the General's share of the U.S. market rose 0.9 percentage points from a year ago, to 17.5%. But GM's incentives also rose, according to early estimates, raising some tough questions. 

Crossovers and pickups drove GM's gains

GM's 4% gain reflected year-over-year increases of 3.4% at Chevrolet and 17% at GMC, while sales fell 9.4% at Buick and 8.6% at Cadillac.

A black 2017 GMC Acadia crossover SUV.

Sales of the all-new 2017 GMC Acadia jumped 26%. Image source: General Motors.

What worked: crossovers, pickups, and GM's big SUVs. GM is in the early stages of revamping its crossover lineup with a series of redesigned models. Both old and new models did well last month:

  • An all-new 2018 Chevy Equinox will begin arriving at dealers soon, but sales of the current model were up 13% last month.
  • The smaller Chevy Trax (up 37%) and its upscale Buick Encore sibling (up 11%) both posted gains.
  • GM's biggest crossovers had mixed results. The Chevy Traverse was up 14%, but the Buick Enclave's sales fell 28%, possibly because of tight supplies; new versions of both are expected later this year. 
  • GMC's all-new-for-2017 Acadia posted a 26% gain over its predecessor's year-ago result. Cadillac's all-new XT5 crossover outsold its predecessor SRX's year-ago totals by 7%. 

GM's full-size pickups also had a very strong month, aided by what was reportedly a huge year-over-year increase in incentives. Sales of the Chevy Silverado (up 17%) and GMC Sierra (up 16%) both far outpaced the market. 

A blue 2017 Chevrolet Silverado pickup on a dirt road.

GM's big pickups had a very good month. But did those gains come at the expense of profits? Image source: General Motors.

But those sales gains may have come at the expense of some profits: According to J.D. Power figures made available to The Motley Fool, the average incentives on the Silverado jumped 56%, to $6,996 per truck. Sierra incentives rose 82% from a year ago, to $5,315 per truck, according to the data.

Last but not at all least, most of GM's big (and hugely profitable) truck-based SUVs also had a strong month: 

  • Chevy Tahoe sales rose 18%.
  • Chevy Suburban sales rose 9.4%.
  • GMC's Yukon (up 23%) and extended-wheelbase Yukon XL (up 15%) both gained.
  • Only Cadillac's Escalade (down 21%) posted a year-over-year decline.

Cars were a tougher sell

Aside from the brand-new CT6, sales of all of Cadillac's sedans were down 25% or more. Cadillac is suffering more than most brands from the swing in buyer preferences toward crossovers, as it has only one model (the XT5); at least two all-new Cadillac crossovers are expected to join the lineup over the next couple of years.

Buick's sales were weighed down by big slumps for its Regal (down 36%) and LaCrosse (down 49%) sedans. The handsome LaCrosse was all-new last year and received positive reviews, but big sedans are a very tough sell right now.  

They're a tough sell at Chevrolet, too: Sales of Chevy's big (and very well-regarded) Impala sedan fell 22%, while the (also very well-regarded) Malibu slipped a worrisome 42%. 

A blue 2017 Chevrolet Bolt.

Last month, 1,820 Chevy Volts found new homes, up 61% from a year ago. Image source: General Motors.

There were a few bright spots in GM's car lineup, however:

  • Sales of the all-new compact Chevy Cruze rose 18%.
  • The Chevy Volt, revamped last year, is finding its way to more enthusiasts: Sales were up 62%.
  • Last month, 952 examples of Chevy's all-electric Bolt EV were delivered. GM is just beginning its nationwide rollout of the Bolt; monthly sales totals should increase substantially over the next few months. 

Fleet sales and inventories

GM said that its sales to fleet customers rose 2% year over year. Rental-car fleet deliveries fell 2%, while deliveries to commercial- and government-fleet customers were both up slightly. 

As of Feb. 28, GM had 900,681 vehicles in inventory, or a 91-day supply. That's still somewhat high, but down significantly from a 108-day supply at the end of January. 

The upshot: It's getting tougher to find sales growth in this market

ALG, the analytics unit of TrueCar, estimated that GM's incentives in February totaled $4,550 per vehicle, or 12.5% of its $36,400 average transaction price. Both figures are high -- the incentives total is up 13% from a year ago -- but the percentage is the tell: Any time incentives exceed 10% of average transaction prices, investors should be concerned that the automaker is reaching for sales in a sluggish market. 

The real concern is that those incentives cut into profit margins. GM's margins in North America have been strong in recent quarters, a trend that investors would very much like to see continue. Rival Ford Motor Company (NYSE:F) seems willing to settle for some modest sales declines in order to maintain per-sale profitability; GM may have to decide to accept some declines of its own in order to preserve its strong margins. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.