General Motors (NYSE:GM) said that its U.S. sales fell 15.3% in July from a year ago, as weak sedan sales and a sluggish overall market more than offset good sales of its newest SUV models.

GM sales: The raw numbers

Metric Total Sales Change vs. July 2016 Retail Sales Change vs. July 2016
Chevrolet 151,502 (15.3%) 132,533 (14.1%)
GMC 47,412 (7.3%) 43,349 (9.3%)
Buick 15,966 (30.5%) 15,811 (23.4%)
Cadillac 11,227 (21.7%) 10,527 (22.0%)
Total 226,107 (15.4%) 202,220 (14.4%)

Data source: General Motors.

What's working for GM: Those new crossover SUVs

Back in January, when GM gave its guidance for 2017, it said that several new crossover SUV models would generate sales and pricing gains to help offset weakness in the sedan market.

GM still has a couple of new crossovers that haven't hit dealers yet, but it's seeing good results with the models it has introduced since the beginning of 2016:

  • Chevrolet Equinox sales rose 7.5% to 23,524. The Equinox is the second-best-selling Chevrolet model, behind only the Silverado pickup family.
  • Sales of the GMC Acadia, the best-selling of GMC's upscale SUVs, rose 30% to 9,722.
  • Buick Envision sales nearly doubled to 2,812. The Envision has been a smash hit in China (where models for the U.S. are made); it appears to be getting some traction here as well.
  • Cadillac XT5 sales rose 11% to 5,504. The midsize luxury crossover, new last year, is now the brand's best-selling model in the U.S.

Also working well, or at least better than you might think from some press reports: GM's all-electric Chevrolet Bolt EV. Bolt sales rose to 1,971 in July, the little electric crossover's best month since its launch in December. That monthly total could rise further: GM said that the Bolt will finally be available at dealers nationwide starting in August.

A red 2018 Chevrolet Equinox crossover SUV parked outdoors, with mountains visible in the background

The all-new 2018 Chevrolet Equinox is off to a strong start. Image source: General Motors.

Not so good: Sales of GM's sedans and pickups

While the overall U.S. market is softening, pickups have been a strong point -- at least for GM's rivals. Ford Motor Company (NYSE:F) had a good month for pickups in July, with sales of its market-leading F-Series up 5.8% to 69,467 trucks sold. Fiat Chrysler Automobiles (NYSE:FCAU) didn't do quite as well, but it didn't fare badly: Sales of its Ram pickup line were roughly flat from a good result a year ago, at 39,708 units.

GM's full-size pickups had a tougher time, in part because of a tough comp -- GM ran an aggressive discount campaign in early July of last year that gave its full-month results a boost. This year, GM has been more careful about pricing, at the expense of sales: Combined sales of its two full-size pickup lines, the Chevrolet Silverado and GMC Sierra, were down 14% from a year ago, to 65,929 trucks. GM's midsize pickups, the Chevy Colorado and GMC Canyon, fared somewhat better: Sales rose 9.7% to 13,967 units.

There was no silver lining in GM's sedan results, though. With one low-volume exception, sales of all of GM's sedan models -- the Chevrolet Cruze, Malibu, and Impala; Buick Regal and LaCrosse; and Cadillac ATS, CTS, and XTS -- fell in July, most by double-digit percentages.

The exception? GM sold 890 examples of the big and posh Cadillac CT6, up 7.6% from a year ago.

A 2017 Cadillac CT6 on a city street

The only GM sedan to see U.S. sales increase in July? The big Cadillac CT6. Image source: General Motors.

Incentives and pricing remain solid

GM said its incentive spending as a percentage of its average transaction prices was 11.5% in July. That's high -- as a rule of thumb, under 10% is considered best -- but GM pointed out that it was more than a full percentage point below the industry average, and 0.5 percentage points below GM's 2016 full-year average.

GM said its overall average transaction price (ATP) in July was about $36,000, up roughly $1,000 from a year ago. GM's U.S. sales chief, Kurt McNeil, said that GM has decided to cut back production rather than boosting sales to rental-car fleets -- a change from its historic practice:

We have strategically decided to reduce car production rather than increase incentive spending or dump vehicles into daily rental fleets, like some of our competitors. We are working hard to protect the residual values of our new products and growing quality retail and commercial sales, and July's ATPs reflect that discipline.

One red flag: Inventories are a growing concern

GM had 104 days' worth of inventory in the U.S. as of the end of July. That's a lot: Generally, automakers like to keep car and SUV inventories around 60 to 70 days' worth, with pickups a little higher. For comparison, Ford had 77 days' worth -- a more reasonable number, especially given growing concerns around the slowing pace of new-vehicle sales.

In a statement, GM reiterated that it is planning downtime at several key North American factories before the end of the year, and that it expects to end 2017 with inventories at more reasonable levels.

With the market slowing, that might require some drastic steps. We'll keep a close eye on this in the coming months.

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