General Motors Co. may implement a reduction in production or an increase in discounts in order to clear away its bulging inventory of trucks, which is more than double the typical levels. GM has to clear away its trucks inventory since at stake is the rollout of new versions of the Chevrolet Silverado and GMC Sierras – both of which are set for release in 2013 and are vital to the carmaker’s success for the year.
GM's large pickups, which accounted for around 23 percent of the GM’s sales in the US in 2011, are among the carmaker’s profitable models. Alan Baum, principal of auto-industry researcher Baum & Associates, told Bloomberg that if GM continues to have high inventories and then roll out the new products, it would hurt the launch of the new trucks.
Baum added that it is more important to GM that the new vehicles have an impressive launch. Usually, carmakers try to maintain around 60 days' worth of sales on dealers' lots. However, GM’s truck supplies swelled from 110 days in October to 139 days in November, as it was caught off guard by rivals clearing out 2012 model-year pick-ups.
According to Kurt McNeil, GM vice president of sales operations, adjusting production would be "first and foremost" in dealing with high inventory levels.
Sales of the Chevrolet Silverado dropped 10 percent to 30,674 units in the US in November while GMC Sierra deliveries slid 2 percent to 11,726. Brian Johnson, an industry analyst with Barclays Plc, forecasted in October that GM would have to cut back its first-quarter truck output by 35,000 units. He recently told Bloomberg that such a move would cost the carmaker nearly $1 billion in revenue.