When General Motors (GM +3.35%) launched its new 2014 Chevy Silverado pickup -- and its near-twin, the GMC Sierra -- it was hoping to reach parity with industry leader Ford Motor (F +4.11%). Ford's F-Series trucks have been the best selling nameplate in the U.S. for decades, but combined, the Silverado and Sierra have been right behind the F-Series in sales volume. Unfortunately, thus far the new trucks haven't had the desired effect on sales.
The 2014 Chevy Silverado (Photo: General Motors)
Instead, GM's desire to raise average transaction prices, along with Ford's targeted use of incentives , have actually allowed Ford to gain market share at the expense of the 2014 Chevy Silverado and the GMC Sierra.
Modest sales growth
GM executives have repeatedly stated that everything is fine with the new pickup launch. However, the 2014 Chevy Silverado's sales numbers have been nothing to write home about. In November, GM sold 34,386 Silverados and 14,362 Sierras, for a total of 48,748 full-size pickups, up 15% year-over-year .
That sales gain doesn't look nearly as good when you consider that GM had a terrible month for pickup sales in November 2012 . Furthermore, Ford -- which had a strong sales performance last November -- put together another solid gain, with F-Series sales up 16.5% last month .
The F-150 may be due for an overhaul, but it still outsells the competition easily (Photo: Ford)
In fact, Ford has now posted seven straight months of selling at least 60,000 F-Series pickups . This has allowed it to win back all of the market share it lost to GM earlier this year, and then some.
In November specifically, Ford sold 65,501 F-Series trucks -- 34% more than GM's total (combining Silverado and Sierra). Looking back over the last four months in total, Ford has outsold GM in the full-size pickup market by more than 20%.
Missed opportunity
The 2014 Chevy Silverado release was probably GM's best opportunity to level the pickup playing field with Ford, but that hasn't happened. It's true that GM has gained ground in terms of pricing, but Ford's pickups still have the highest average selling price in the market, despite the discounts that have helped the F-Series gain market share.
The competition with Ford will only get tougher next year. Ford is expected to introduce its next-generation F-Series pickup in early 2014, which will hit dealer lots later in the year. The new Ford F-Series trucks are expected to resemble the "Atlas" concept, which incorporates a number of enhancements, particularly to fuel economy .
The next-generation Ford F-150 may be similar to the "Atlas" concept truck (Photo: Ford)
In total, the new Ford F-150 could offer a 3 mpg improvement in fuel economy compared to the 2014 models . Since one of GM's main marketing messages is that the 2014 Chevy Silverado offers better fuel economy with a V8 engine than a Ford F-150 with a V6 EcoBoost, Ford has a lot to gain by leapfrogging GM in fuel economy again .
If GM is looking to narrow the market-share gap with Ford, it has a relatively short window of opportunity. The pickup market tends to be fairly "sticky" -- it's hard to break a buyer's loyalty to one brand -- so GM's best chance to gain share is while it has a product advantage. By this time next year, Ford will have the newest truck on the block, giving it the initiative in the race for market share.
Foolish bottom line
The 2014 Chevy Silverado has been well-received (as has its twin, the 2014 GMC Sierra), and GM executives claim that they are happy with the rollout so far. However, from a market-share perspective, the new pickups have not succeeded yet. Despite having the oldest product in the pickup market, Ford is actually gaining share, as GM has resolutely held the line on discounting.
The problem for GM is that Ford will release its own new pickup in less than a year. If GM is having trouble gaining share while cutting back on incentives today, it will be even harder to drive sales growth without discounts next year. GM executives should therefore consider being a little more aggressive on pricing for the 2014 Chevy Silverado in order to gain share while it still has the newest truck among the Big Three.
Given how high pickup margins are -- and how many repeat buyers there are -- long-term share loss is probably a bigger concern than incremental margin erosion. Today, GM has arguably the best pickup on the market . A year from now, that might no longer be the case. It's time to strike while the iron is hot.
