DETROIT — General Motors’ dealers have a problem — and they say it’s a good one.
They can’t keep pickups and full-sized SUVs in stock as customers continue to buy the new vehicles despite the ongoing coronavirus pandemic.
Often, the popular trucks roll off the transit already sold, driving a sales surge for many dealers in the third quarter, even stealing some customers from other brands.
“I went to look this morning at our bullpen of trade-in’s and I was surprised how many F-150s and Toyota Tacoma and Tundra trucks are in there,” said John Pitre, COO of Motor City Buick GMC in Bakersfield, Calif., on Wednesday. “People are trading those for this new half-ton diesel (GMC) Sierra.”
But in the ongoing truck war, the Chevrolet Silverado has slid back to the No. 3 position behind Fiat Chrysler Automobile’s Ram pickup and the class leading Ford F-150. For the third quarter, in sales figures released Thursday, GM sold a total of 147,484 Silverado pickups, trailing the Ram 1500 and heavy duty pickup sales of 156,157. Ford’s third-quarter sales results come out Friday.
Last quarter, the Silverado had passed the Ram, settling back in the No. 2 spot in the ongoing race for truck supremacy.
‘Pandemic induced demand’
On Thursday, in GM’s sales report, the GMC Sierra had its best third quarter ever, GM said. The heavy-duty and light-duty Sierra pickup sales came in at 67,812 vehicles, up from 66,198 in the year-ago period.
The heavy-duty Silverado saw its sales rise 9 percent and the heavy-duty Sierra sales surged 11 percent. But the light-duty Silverado saw sales fall 9.6 percent; the light-duty Sierra rose about 1 percent.
Year-to-date, GM’s combined light- and heavy-duty pickups gained 1.6 percentage points in retail market share to capture 37.5 percent of the segment, according to J.D. Power.
But total sales for GM fell by 10 percent in the third quarter to 665,192 vehicles compared with the year-ago period. Through September, for the year, GM’s sales were down 17.4 percent to 1.8 million vehicles sold.
Like all domestic carmakers, GM is catching up on sales after an eight-week production shutdown amid the coronavirus pandemic.
As the industry recovered, GM’s retail sales improved each month in the quarter with a strong finish in September, it said. GM commended its dealers who used online shopping tools to get customers into vehicles despite tight inventory levels.
“This is contributing to retail share gains while we continue to refill the pipeline,” said Kurt McNeil, GM vice president of U.S. sales operations. “Industry-wide, dealers are selling a high mix of large pickups as the summer comes to an end. Our strong large pickup and all-new full-size SUV lineups from Chevrolet and GMC are selling extremely fast.”
Earlier Thursday, Fiat Chrysler reported its third-quarter sales dropped 10 percent to 507,351 vehicles from the same period last year. FCA said strong retail sales offset ongoing softness in fleet purchases. It sold 140,265 more vehicles this quarter than last.
GM’s leaders said retail sales have recovered in part due to overall economic strength.
“While the economy has made a substantial rebound in the third quarter, retail auto sales have been even more resilient,” said GM Chief Economist Elaine Buckberg. “Super low auto loan interest rates have boosted retail auto sales, yet more strength comes from pandemic-induced demand.”
GM said its mid-size SUVs outperformed the industry with sales of the Chevrolet Blazer up 45 percent, its best quarter ever. Also, sales of the Cadillac XT6 rose 45 percent and the Buick Envision compact SUV saw a 44 percent jump in sales. But as a brand, Cadillac still struggled with its third-quarter sales down 17.5 percent and yearlythrough September sales down 25 percent.
Cadillac said Wednesday that it will launch a new ad campaign starting this month to promote the upcoming 2021 redesigned Escalade. Emmy and Oscar-winning actress Regina King will serve as the brand’s ambassador this fall in a new “Never Stop Arriving” campaign for the vehicle.
GM continues to roll out its other redesigned full-sized SUVs: The 2021 Chevrolet Tahoe and GMC Yukon. Many dealers say the vehicles are in high demand, but remain in tight supply. For the quarter, sales of the Yukon were down 25 percent and sales of the Tahoe were down 12 percent.
Since the 2021 model year Yukon started shipping in August, Motor City Buick GMC has sold about 65 of them, that’s about 25 percent higher than the outgoing model would have sold last year, Pitre said.
“There’s been a lot of pent-up demand because it was pushed back for a variety of reasons,” Pitre said.
Build it and they come
GM dealers across Michigan and other parts of the country say they could sell more pickups and SUVs if they had more in stock.
General Sales Manager Jim Hill said his inventory at LaFontaine Cadillac Buick GMC in Highland Charter Township, Mich., is half of what it normally would be this time of year. But his sales are double and carry with them richer profits from sales of the GMC Sierra and the newly designed 2021 Yukon.
“We don’t have to discount them and most are sold as they roll off the transit,” Hill said. “A customer from New York state called and asked if we’d sell them a truck and I couldn’t. It was already sold. We have had customers from Illinois, Wisconsin and Indiana ... they’re coming from all over the country. I can’t tell you the last time that’s happened. It’s nice.”
Hill said sales of the Sierra and Yukon Denali trim are “some of the best sales we’ve had.” For September, his store sold 43 Sierra lightweight pickups, the average per month is 25. Likewise, his sales of the 2021 Yukon are up 25 percent for September compared with a year ago.
Customers are mostly trading in older model GM vehicles or Ford pickups, he said. What gives GM an edge over the competition, he said, is the AT4 sporty package and the Denali luxury package offered on the trucks.
“It shows how competitive the market is in truck sales,” Hill said. “Everyone builds a good truck — Ford, Chrysler and GM. But in this market, when they’re looking to buy and not lease pickups, the manufacturer that has the hottest product and offers a high-end, you will see some conquest. Will it happen long term? We’ll see. But when you have new and exciting product, people come.”
In fact, he said, Cadillac vehicles sell well, but part of the problem has been inventory especially in the CT5 sport sedan. He has about 40 in stock now and expects to see sales increase with the added inventory. LaFontaine sells a good volume of the XT5 and XT6 SUVS as well as the 2020 Escalade, Hill said. The redesigned 2021 won’t arrive until the middle of next month. But he has taken about 20 preorders for it and, he said, “for a $100,000 vehicle, that is good.”
As for Buick, the Encore and Encore GX compact SUV as well as the Enclave mid-size SUV are both good sellers, he said.
Good times ahead
At Sellers Buick GMC in Farmington, year-to-date sales are up 15 percent to 20 percent, said Sam Slaughter, owner.
Like LaFontaine, Sellers also has sold mostly Buick Encores and the GMC Sierra and Yukon.
“When we’re selling a Sierra almost half a time someone is looking at another pickup and cross shopping with the RAM and F-150,” Slaughter said. “But they have the same inventory problems we do.”
So a sale sometimes comes down to which dealer has the vehicle in their inventory. Slaughter said he is surprised at how sales have rebounded this year.
“I never would have expected the third quarter to end like it did and be like it was for the three-month period,” Slaughter said. “Had you asked me in May, I would have said we’re in for a grim period. That has not been the case.”
At Matick Chevrolet in Redford, Mich., it’s the Chevrolet Blazer SUV that is the hot seller along with the Silverado pickup, said Paul Zimmermann, vice president and partner of Matick Automotive. But he has taken several preorders for the redesigned 2021 Tahoe and Suburban full-size SUVs, which are low in inventory.
“Sales are good, volume is strong and for the quarter as a whole it’s flat year over year, so it’s caught back up” from shutdown, he said. “There’s probably not as much shopping traffic versus folks who are buyers.”
The Blazer is winning customers with people trading in Jeep Cherokee SUVs and some Ford Flex and Ford Escape SUVs for a Blazer, he said.
As to the what’s ahead for the rest of the year, Zimmermann said that might become more transparent after the presidential election. Though he says no matter who wins, all the economic indicators signal good times ahead.
“Jobs continue to be strong and money is inexpensive to borrow, so we see customer confidence as pretty darn high,” Zimmermann said. “I’ve done this for a long time and you have to keep reminding yourself that, six months ago the governor shut the economy down. It’s mind boggling how strong things are and have recovered so quickly.”