General Motors reported a 3% increase in sales for the month of November but it experienced an unanticipated drop in pickup sales that left GM with inflated truck inventories. GM attributed the 8% decline in pickup sales on the huge incentives offered by rivals in the full-sized pickup market like Ford Motor Co., Chrysler Group.
At a conference call, GM U.S. sales chief Alan Batey said that GM executives were "shocked" to know that Chrysler's Ram division offered $5,000 in incentives for each unit. He explained that this can’t be sustainable. GM said that the incentives offered on each unit of the Chevrolet Silverado and GMC Sierra were $500 lower than the average for full-sized pickups.
He said that its rivals who spent the most in this segment offered incentives that are about $1,500 to $1,700 higher than that of GM. According to a Chrysler spokesman, the incentives on Ram 2012 trucks are "within a few hundred dollars" of the spiffs provided by rivals on their 2012 units.
For both model years, the incentives of Ram were higher since over 90% of its November sales were from the outgoing 2012 model, which is being replaced with an re-engineered 2013.
One significant reason pointed out is that GM delivered its 2013 pickup models about 45 days ahead of its release last year. Because of this, dealerships were able to sell mostly the higher-priced '13 models while rivals provided the more heavily discounted 2012s. GM said that about 60% of the pickups it sold in November were 2013 model units compared to 35% for Ford and fewer than 10% for Ram.
Last November, GM sales executives observed that rivals were increasing their incentive spending but chose not to match them. According to Mark Reuss, president of GM North America, the company doesn't want to make customers confused by revising incentives when their rivals do so.