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.