Please ensure Javascript is enabled for purposes of website accessibility

New Crossovers Spark Solid January Sales at GM

By Adam Levine-Weinberg - Feb 5, 2018 at 12:10PM

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

All-new versions of the Chevy Equinox and Chevy Traverse helped General Motors maintain its sales momentum last month.

Ever since domestic auto sales growth began to tail off a couple of years ago, many investors have been expecting U.S. automakers' profitability to plunge. To some extent, that has happened at Ford Motor (F 1.71%). Ford reported disappointing results in 2017 and doesn't expect 2018 to be any better.

By contrast, General Motors (GM 1.35%) is still posting record profits. CEO Mary Barra's bold moves to exit underperforming markets certainly contributed to this earnings momentum. Strong demand for GM's lucrative truck, SUV, and crossover models in the U.S. has had an even bigger impact on profits. The latter trend continued last month.

Another successful month for the General

GM ended 2017 on a strong note, with retail sales up 1.8% year over year in December. (Total deliveries declined 3.3%, but that was due to a decision to cut back on lower-margin sales to rental car companies.) General Motors' four major pickup models were the main drivers of this rock-solid sales performance.

Pickup sales remained robust last month, rising 7.6% year over year. The Chevy Colorado and Chevy Silverado models sold particularly well, logging double-digit gains.

However, Chevy's new crossovers were the real stars of January. Last year, GM introduced all-new versions of its high-volume Chevy Equinox and Chevy Traverse models for the first time in nearly a decade. These new models are just hitting their stride. Domestic deliveries of the Chevy Equinox reached 26.405 units last month, up 50.3% year over year. Meanwhile, Traverse deliveries surged 41.5% to 11,627 units.

A red 2018 Chevy Traverse parked on snow

The all-new 2018 Chevy Traverse is off to a good start. Image source: General Motors.

Deliveries of several other GM crossover models rose by double digits last month, including the Buick Envision, Chevy Trax, and GMC Terrain.

In total, General Motors posted a respectable 1.3% uptick in deliveries in the U.S. last month. Retail sales slipped 2.4% year over year -- partly due to lower incentive spending -- but commercial and government fleet sales surged 44%.

Another mixed bag for the Blue Oval

While General Motors continued to fire on all cylinders last month, Ford came up short once again. Total deliveries declined 6.6% year over year, while retail sales were down by 4.3%.

Truck sales remained strong for Ford in January; the F-Series lineup had its best start to a year since 2004. The recently updated Ford Expedition and Lincoln Navigator full-size SUVs are also seeing strong demand. (Navigator deliveries nearly doubled, and while Expedition deliveries fell by more than 15%, this was due to supply issues.)

On the other hand, Ford's car sales plunged again, and most of its crossover models posted sales declines as well. The one bright spot was that Ford began U.S. deliveries of its EcoSport subcompact crossover last month. That's a growing segment of the domestic market that Ford hasn't been able to participate in until now.

With 500 deliveries, the EcoSport wasn't material to Ford's January sales performance. However, Ford is just starting to build inventory of this model. It ended the month with 19,000 EcoSports in transit from overseas. As those vehicles make it to dealer lots, monthly EcoSport deliveries will rise significantly.

A question of momentum

General Motors has plenty of catalysts that should help it maintain its sales momentum. Later this year, it will begin to refresh its highly profitable full-size truck and SUV lineup with new models. GM will also roll out a second crossover for its upscale Cadillac brand in 2018, which may be followed by a new midsize Chevy crossover to fill the gap between the Equinox and Traverse.

This new product offensive should help General Motors continue posting solid sales results domestically, even though the U.S. auto market peaked in 2016.

By contrast, it could take a while for Ford to regain its momentum. The arrival of the EcoSport this year should definitely help, but subcompact crossovers are still a relatively small segment of the U.S. auto market. The return of the Ford Ranger midsize pickup and the Ford Bronco SUV could have a bigger impact on Ford's trajectory, but neither will be available for a while. For 2018 at least, GM is likely to continue gaining ground on Ford.

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
GM
$32.19 (1.35%) $0.43
Ford Motor Company Stock Quote
Ford Motor Company
F
$11.32 (1.71%) $0.19

*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
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

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.