Please ensure Javascript is enabled for purposes of website accessibility

Why General Motors' Sales Are Still Rising

By John Rosevear - Feb 1, 2018 at 5:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The secret: Hot new products in big-selling market segments.

General Motors (GM 5.55%) said that its U.S. sales rose 1.3% in January, powered by strong sales of pickup trucks and its new line of crossover SUVs.

The gain outpaced both of GM's old Detroit rivals: Ford Motor Company's (F 3.89%) U.S. sales fell 6.6% in January, while Fiat Chrysler Automobiles' (FCAU) fell 13%.

A black GMC Terrain crossover SUV, parked in front of a brick building.

Sales of the upscale GMC Terrain rose 14% in January. Image source: General Motors.

Crossovers, crossovers, and more crossovers

Right now, crossover SUVs are in huge demand. And it's an old axiom in the auto business that buyers are drawn to -- and willing to pay up for -- the freshest new products. Naturally, you'd expect the automaker with the newest lineup of crossovers to be doing quite well right now.

That would be General Motors, and it is indeed doing quite well. With a couple of exceptions, all of GM's crossover models are all-new models introduced in the last two years, and sales of the group have been brisk.

Vehicle January 2018 U.S. Sales Year-Over-Year Change
Buick Enclave 2,715 0.9%
Buick Encore 4,645 (11.7%)
Buick Envision 2,487 13.7%
Cadillac XT5 3,989 2.7%
Chevrolet Equinox 26,405 50.3%
Chevrolet Traverse 11,627 41.5%
Chevrolet Trax 6,106 16.1%
GMC Acadia 7,444 (16.4%)
GMC Terrain 7,130 14.2%
Total GM crossovers 72,548 20.5%

Data source: General Motors. All models except the Encore and Trax were all-new for the 2017 or 2018 model years; the Encore and Trax were refreshed for 2017.

January's sales numbers suggest that some of GM's crossovers, notably the Equinox and Traverse, are winning sales away from rivals. Consider that sales of FCA's vaunted Jeep lineup were up just 2%, while sales of Ford and Lincoln crossovers as a group fell almost 8%.

A red 2018 Chevrolet Colorado midsize pickup truck.

Sales of GM's midsize Chevrolet Colorado pickup have been very strong recently, up 25% in January. Image source: General Motors.

GM is also doing well with pickups -- but not with sedans

Right now, GM offers four pickup models: The full-size Chevrolet Silverado and GMC Sierra, and the midsize Chevrolet Colorado and GMC Canyon. Sales of the group rose 7.5% in January.

A good chunk of that sales volume came from the Silverado and Sierra (up 5.4%), which compete directly with FCA's Ram trucks and Ford's vaunted F-Series line. The Ram had a tough month, with sales down 13% -- but an all-new Ram will begin arriving at dealers in a few months.

Meanwhile, sales of Ford's F-Series sales rose just 1.1%, trailing the GM twins' gain. But on this front at least, Ford may be winning the greater war: While GM appears to have been offering heavy discounts on the Silverado, the average transaction price paid for the Ford trucks in January was up about $1,400 from a year ago to $47,800, a record.

Both GM and Ford had little to brag about when it came to sedans, though. The sedan market has been weak for a couple of years, as more buyers have been trading in sedans for crossovers -- and many of the buyers who did want sedans in January opted for Toyota's Camry, which is all-new (and much-improved) for 2018: The Camry outsold GM's Chevrolet Malibu and Ford's Fusion combined last month.

The upshot: GM is making money in a sluggish market

Essentially, right now GM is trading sedan sales for crossover sales. That's a pretty good trade in a sluggish market: Crossovers are more profitable, generally speaking, than sedans, and GM's new crossovers were designed to deliver more profit than their predecessors.

GM won't report its full-year 2017 earnings until next Tuesday, but it appears that the crossovers played a big part in keeping GM's profits strong in a so-so market in 2017. GM is hoping they can do the same in 2018, until its all-new Silverado and Sierra arrive at the end of the year. It's early yet, but so far, so good.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
$34.82 (5.55%) $1.83
Ford Motor Company Stock Quote
Ford Motor Company
$12.01 (3.89%) $0.45
Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.