GM Posts Steep Sales Drop on Dialed-Back Discounts
(Bloomberg) -- General Motors Co.’s sales fell about 13 percent 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 percent 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 vice president 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.”
Malibu’s Meager Month
Like its peers, GM had a tough time selling passengers cars last month. Deliveries plummeted about 62 percent for the Chevrolet Malibu sedan and 38 percent for the Cruze compact, two people said. The Chevy brand as a whole was down roughly 14 percent, while the Cadillac luxury line, which is trying to regain traction under new chief Steve Carlisle, was down 10 percent.
The Chevy Silverado pickup also had a tough August, dropping about 23 percent, 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 percent to $35.60 at the close and is now down 13 percent this year.
GM lowered incentive spending during the month by more than $800 a vehicle on average compared with August of last year. Its discounts also were down more than $200 from July, to $4,146 a vehicle, according to data from J.D. Power. Spending averaged $5,097 a vehicle at Ford and $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 $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.”
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