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GM posts steep sales drop on dialled-back discounts

The front end of a 2019 GMC Sierra SLT at ts global debut at the Russell Industrial Complex in Detroit, Michigan, U.S., on Thursday, March 1, 2018. Photographer: Jeff Kowalsky/Bloomberg

By BLOOMBERG

SOUTHFIELD • General Motors Co’s (GM) sales fell about 13% in August as the automaker pulled back on sales incentives, especially for full-size pickups, people familiar with the matter said.

The sales result, described by people who asked not to be identified because GM no longer reports them publicly every month, trailed analysts’ average estimate for a 7.7% drop.

All major automakers except Ford Motor Co fell short of predictions in August, as demand plunged for passenger cars including the Toyota Camry and Honda Accord.

Any pullback in fleet sales or discounts was likely to drag on overall sales because retail demand is deteriorating, said Jeff Schuster, senior VP of forecasting for LMC Automotive. Industrywide sales this year still have kept pace with last year’s strong results.

“GM pulled way back on incentives in the month,” Schuster said. “The retail market is softer than last year. We have kept pace with last year because of fleet sales.” Like its peers, GM had a tough time selling passengers cars last month.

Deliveries plummetted about 62% for the Chevrolet Malibu sedan and 38% for the Cruze compact, two people said. The Chevy brand as a whole was down roughly 14%, while the Cadillac luxury line, which is trying to regain traction under new chief Steve Carlisle, was down 10%.

The Chevy Silverado pickup also had a tough August, dropping about 23%, two people said. GM began building the redesigned truck model and its higher-priced cousin, the GMC Sierra, last month, and will speed up production through the rest of the year.

Jim Cain, a GM spokesman, declined to comment on the sales figures, though he did confirm that the company dialed back discounts during the month. The automaker’s stock dropped 1.2% to US$35.60 (RM147.74) at the close and is now down 13% this year.

GM lowered incentive spending during the month by more than US$800 a vehicle on average compared to August of last year. Its discounts also were down more than US$200 from July, to US$4,146 a vehicle, according to data from JD Power. Spending averaged US$5,097 a vehicle at Ford and US$4,760 for Fiat Chrysler Automobiles NV.

Cain said GM felt good enough about inventory levels to pull back on deal-making. The company boosted average transaction prices by US$915 a vehicle from a year earlier, he said.

“We felt comfortable with our overall performance, especially with the new vehicles, and thought we had an opportunity to demonstrate discipline,” Cain said. “Some of our major competitors didn’t follow.”