Will GM Continue to Cut Incentives for Pickups?


General Motors has done well sales wise but it is currently trying to reduce the cash incentives that go along with its full size pick-up trucks. Kurt McNeil, The US sales and operations VP explained that GM had plans to show more discipline when giving out the incentives that have in the past, reduced the prices of the vehicles by a good few thousand dollars.
The Wall Street Journal has reported the day before that GM was to stop the discounts on the 2014 models of their GMC Sierra and Chevrolet Silverado because they want to increase profits as well as improve the resale value of the vehicles. This did imply that they may cut all of their discounts but a spokesman, Jim Cain, explained that they will still be offering some discount to encourage buyers but not so much as to hurt profits and resale value.
GM spent $3183 on pickup incentives in mid October and Ford spent $4400 with Chrysler not revealing theirs. GM is discounting their 2013 Sierra and Silverado by up to $6000but Ford is reducing their 2013 F-150 by $9000 and Ram $7950 from the 1500.
The sale of pickups are very healthy. The F-series has sold 60,000 for the last six months and this means they have sold 623,309 in the year which is 30% higher than 2012. They also improved sales by 20% on their sierra and Silverado pickups to 555,608 in October. Ram saw a 23 percent increase to 292,633 pickups.
According to J. D. Power GM’s transaction price was its highest ever at $32,864 on all vehicles. With the positive press its 2013 Cadillac ATS and 2014 Corvette has had with this sales momentum, GM has said that it will work on product driven strategies. It will be offering just $1000 cash incentives on the 2014 Sierra and Silverado.
The president, Mark Reuss explained that there will be changes. December is the busiest month for sales as small businesses and fleets buy them so they can write them off against tax and so this could mean they run short. In October dealers had their Silverados and Sierras for 106 and 94 days while Ford had a 90 day supply.
Erich Merkle, Chief Sales Analyst, has explained that he doesn’t expect the incentives to change. He explained that competitors have tended to change theirs but they tend to keep to a consistent level.
This segment does very much rely on the incentives though and so it may lead to a price war if GM hold on to their low discounts.


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