GM is having supply shortage of popular new pickups

Article by Anita Panait, on October 1, 2013

Demand for the most popular versions of General Motors’ new Chevrolet Silverado and GMC Sierra is so high that the carmaker is struggling to produce them, three sources told Bloomberg. Two of them disclosed that high demand for the trucks is exceeding the ability of a supplier to build certain drivetrain parts for the 5.3-liter V-8 engine, the most popular size.

They added that GM is limiting the number that dealers can order. One of the sources said the issue could be resolved soon, although another remarked that it may take longer than a couple of months. The Silverado and Sierra are some of GM’s high-profit offerings, with each generating $8,000 to $10,000 in gross profit for the carmaker.

With the profit these pickups bring to GM, the carmaker has resolved the shortage quickly to get the most out of its redesigned trucks before rival Ford rolls out a new F-150 in 2014.

Alan Baum, an industry consultant at Baum & Associates, told Bloomberg in an e-mail that “this is a window of opportunity for GM given the strong pickup market and the new Ford truck which launches in fall 2014.” One of the sources said that the limited supply is most noticeable to dealers used to ordering only V-8 trucks.

GM spokesman Terry Rhadigan said that dealers always want more of the “hot new truck,” noting that it is “a temporary thing.” He remarked that a dealer only gets eight of the 5.3-liter pickups even if he ordered 10. According to the Automotive News data center, sales of car and light truck sales in the US are at a seasonally adjusted annualized rate of 16.1 million in August 2013, the fastest growth since October 2007. GM expects US light-vehicle deliveries for 2013 to reach 15.5 million.

Topics: gm, pickup truck

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