General Motors (
) announced its U.S. sales for November. There wasn't too much of a
shock or surprise in the headline figure as the automaker's sales
grew 3.4% to 186,505 units. On a year-to-date basis, its sales
are up 3.3%. We take a closer look at the report and
investigate the good and the bad about this sales report.
The good part about the monthly sales report was that GM's car
sales were up almost 19%, led by Chevrolet Cruze which was up 27%.
The much maligned Volt was up 33% as well. Overall, combined sales
of mini, small and compact cars were up 51%.
Moreover, Cadillac sales surged 30% to 14,517 units. Sales
through November are still marginally down, but they have only
accelerated after the introduction of the ATS and XTS so we are
likely to see the momentum carry over into 2013 as well. GM
has big plans to push the Cadillac and double its sales in the next
three years. Luxury vehicles have wider margins so if the trend
continues, the company's profitability will certainly benefit.
See full analysis for General Motors
Sales of light trucks were down 3.8%. Since they make up for
more than 60% of its total sales, its impact was pretty much
evident on the overall sales figures. The worrying news is
that the automaker's pick up truck inventory swelled to 139 days
from 110 days in October. GM will unveil the Silverado 2014
early next year and a rising inventory of its existing line up
could dent the launch of the redesigned model. To clear its
existing stockpile, GM might need to offer abnormally high
incentives which could then suddenly make the newer model appear
unattractive due to its higher pricing. Silverado is GM's best
selling vehicle and accounts for about 15% of the company's total
sales. Moreover, heavier vehicles are generally more profitable so
their contribution to the overall profits could be even higher.
GM cited higher incentives offered by its competitors as the
reason for the decline in truck sales. While GM's truck sales
) and Chrysler registered a growth of 2.8% and 9.6%
respectively. A look at incentive spending offered by other
automakers reveals that GM's average incentive spending was indeed
lower than Chrysler's $4,748 for the Ram pickup but was still
higher than Ford's $3,294 per unit. GM offered $3,988 per
unit for Silverado and $4,226 for Sierra. Thus, there is still work
left to be done by GM in this department.
We have a
$26.90 price estimate for General Motors,
which is about 5% more than the current price.
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