Will Big Sales Gains for General Motors' SUVs Translate to Big Profits?

General Motors (GM -0.04%) said that its U.S. sales rose 15.7% in March, outpacing analyst estimates, on strong sales of trucks and SUVs across its four brands.

GM's gain not only far outpaced the 5.1% increase expected by analysts polled by Bloomberg, it also outpaced gains at both of GM's traditional Detroit rivals. Ford Motor Company's (F 0.08%) U.S. sales rose 3.4% in March on high demand for its pickups, while a 45% jump for Fiat Chrysler Automobiles' (FCAU) Jeep brand was the big driver of its 11% overall gain.

Year to date, GM's U.S. sales are up 3.8% from the same period in 2017.

Sales of the big three-row Chevrolet Traverse crossover, which is all-new for 2018, rose 41% in March. Image source: General Motors.

High and low points from GM's March sales results

The high points:

• For the most part, GM's big gain wasn't driven by low-margin fleet sales. GM's retail sales rose 14% in March. Its retail market share rose to 17.7%, GM's highest level in nine years.
• Demand for GM's new crossover SUVs continued to be very strong across all four of its brands:
• Sales of Chevrolet crossovers rose 39% from a year ago;
• Sales of Buick crossovers rose 50%;
• Sales of GMC crossovers rose 42%; and
• Sales of Cadillac's lone crossover, the XT5, rose 17%.
• Despite stiff competition from Ford's all-new Lincoln Navigator SUV, sales of the massively profitable Cadillac Escalade rose 14%.
• Sales of GM's full-size pickups, the Chevrolet Silverado and GMC Sierra, rose a combined 14.4% to 69,629.
• Sales of the Chevrolet Bolt EV rose 81% to 1,774.
• GM had 72 days' worth of inventory as of the end of March. (That's a reasonable level. The takeaway is that GM's inventories aren't swelling.)
• While GM's incentive spending is up, it said that its average transaction prices (which are net of incentives) were roughly flat from a year ago, suggesting that margins aren't yet slipping significantly.

The low points:

• While the Chevy Bolt continues to sell well, its hybrid sibling, the Volt-with-a-V, has slumped. Sales were down 16.4% to just 1,782 units.
• Chevy's coupes and sedans in general had another tough month. Sales of the Camaro, Corvette, Cruze, Impala and Volt were all down by double-digit percentages. Only the midsize Malibu and the tiny Spark and Sonic managed gains, likely from rental-fleet sales. (Rental-fleet sales represented 11% of GM's total sales in March, a fairly low level.)
• The all-new Buick Regal isn't winning over buyers. Sales were down 38% from a year ago.

Despite fierce competition from an all-new Lincoln, the Cadillac Escalade had a good month. Image source: General Motors.

The takeaway: GM's U.S. sales probably set up a good first quarter

GM's all-new crossovers are thought to be more profitable than the vehicles they replaced. They're clearly winning over buyers, with sales of big-volume models like the Chevrolet Equinox (up 31.4% in the first quarter) and Traverse (up 30.1%) up substantially from a year ago.

Meanwhile, while GM's other big drivers of profit -- its trucks -- have mostly managed year-over-year gains, the increments have been a lot smaller. That's understandable: GM's pickups and big truck-based SUVs are nearing the ends of their product cycles, with all-new models expected over the next couple of years.

Taken together, these gains should more than offset the lost profit from declining sales of most of GM's sedans. With the first quarter of 2018 now in the books, it looks like GM is on track for another strongly profitable year.

How GM's U.S. sales compared to rivals'

Below you'll find March sales totals for the six largest-selling automakers in the U.S. As you can see, GM's gain was the largest of the group, but all except Nissan managed a year-over-year increase in March.

Data sources: The automakers.