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Is General Motors Losing the Pickup Truck War?

By John Rosevear - Sep 28, 2015 at 7:06PM

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GM has made big sales and market-share gains with its full-size pickups this year. But with Ford finally on an upswing, it looks like GM might suddenly be on the defensive -- and that could be expensive.

Sales of the Chevy Silverado have been great this year. But they may have taken a turn for the worse in September. Source: General Motors.

Is General Motors (GM 3.07%) suddenly falling behind in the pickup sales race?

If so, that would be a bit of a surprise. Through the first eight months of 2015, it has been no contest: Sales of GM's Chevrolet Silverado and GMC Sierra were up a combined 14.4%, while those of arch-rival Ford's (F 3.89%) F-Series were down 0.5%.

It looked like big truck sales were setting GM up for a great third quarter. But five new numbers from TrueCar suggest that the story may have taken a different turn in September.

The five numbers that should concern GM investors
TrueCar estimates that when all is said and done, the overall U.S. market for new vehicles will be up 12.6% in September versus a year ago.

That's a good gain. But TrueCar's analysts think that GM didn't get its fair share of it. They see GM's sales rising just 9% over year-ago totals.

Now, that's not a bad gain. But it lags the market, which is significant. What's going on?

I think the answer is likely found in three more numbers from TrueCar: Its estimate for Ford's September sales, up 18.7%; its estimate for Ford's spending on incentives, down 2.5%; and its estimate for GM's incentives -- up a whopping 10%.

What's that mean? We won't know for sure until the automakers release their official September sales numbers on Thursday. But here's a very educated guess: Ford is stealing back a lot of lost pickup sales -- at GM's expense.

Ford is fighting back, and GM may be scrambling to keep up
Ford dealers have had short supplies of the all-new F-150 for months because of the extensive downtime required to set up Ford's two factories to make the new aluminum-bodied truck. 

Ford was able to offset the profit impact in part by trimming its typical pickup incentives. Incentives are key in the full-size truck segment, but demand for the new F-150 was high enough that most Ford dealers had no trouble selling the limited number of pickups they could get.

Ford's two pickup factories were shut down for weeks to change over to production of the new F-150. But now, both factories are running at full speed. Source: Ford Motor Company.

That gave Ford extra profit on the trucks it was selling, but it also gave GM a big opening. It pushed its dealers, Chevy dealers in particular, to make the most of Ford's supply shortages and stinginess with incentives. They did: Silverado sales are up almost 17% through August. Better yet, GM managed to do that without boosting its incentives to outrageous levels.

But now, most of Ford's dealers should have full inventories of the new F-150 -- or at least, more than they've had all year. Last month, Ford adjusted its incentives on the F-150 to more typical levels. 

It looks like Ford sold a lot of pickups in September. And it also looks like GM might have boosted its truck incentives in an effort to hang on to its hard-won market-share gains.

The big question for Barra: How much profit will you give up?
If that's really what happened, then there will be some questions for GM, starting with this one: How much profit are you giving up to hold on to a sales advantage?

CEO Mary Barra has said over and over that GM is no longer interested in competing for sales crowns. Instead, it's aiming to be the most profitable automaker, finding the opportunities that will generate the best return on its capital.

As a shareholder, that's exactly the kind of talk I want to hear from a CEO. And it's possible that there's a not-unreasonable explanation here: GM is giving the Silverado a facelift for 2016, and the incentives could be intended to clear out 2015 models before the updated ones arrive.

But if GM really has started putting big incentives on its pickups in order to try to keep pace with sales of Ford's new F-150, then I think Barra will have some questions to answer in next month's third-quarter earnings call.

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