GM Dealers Say Low Demand, Not Lack of Supply Explain Poor Truck Sales

Chevy pickupThe past month has brought much confusion and concern for General Motors’ shareholders regarding the most important and profitable segment of sales for the company. As the company prepares to report earnings for the third quarter this week, media reports are still unclear on just what is going on with GM’s new truck lineup; specifically pertaining to the reasons behind the disappointing sales figures that were reported for the month of September when Ford’s truck offerings left them in the dust.

While GM’s Obama-appointed management spun the story (claiming supply could not keep up with demand) to some in the media who are gullible enough to print the misinformation without question, some GM dealers were more honest with their assessment.

GM’s management has lots of experience when it comes to trying to deceptively explain away poor sales of much-hyped vehicles. The Chevy Volt has never lived up to expectations and the same “supply can’t keep up with demand” excuse was used, even as GM temporarily halted production at plants making the vehicle due to the embarrassing sales. As those in GM management present their case as virtuously as politicians seeking reelection, some at GM’s dealerships (who have a bit more credibility) give a clearer picture as reported by Automotive News.

The article quotes one Florida Chevy dealership general manager as saying that the 2014 Chevy Silverado (GM’s bread and butter pickup) is selling “very poorly.” The president of another dealership in Texas says his supply of Silverados was up to 170 days compared to his previous average of 110 days. Yet another principal of four Texas dealerships said his truck supply was up to 120 days compared to the typical 90 day supply. Assuming that the management and owners of Chevy dealerships are not part of a right-wing conspiracy to hurt GM because of its ties to President Obama, it would appear that we can put to rest the notion that the lackluster sales for GM’s new truck lineup is a result of supply not being able to keep up with demand.

GM dealers are pointing to the simple fact that competitors have better deals on their truck offerings and consumers can get better bang for their buck elsewhere. Of course, the dealers would like to see increased incentives on the vehicles to spur sales; a remedy that hurts profits and shareholders at GM. The ingenious response from GM? Trick consumers by raising prices of the trucks and then increasing incentives! As PT Barnum (or perhaps a White House spokesman) might say, “There’s a sucker born every minute!”

Another Automotive News report blows holes in the “supply can’t keep up with demand” excuse. The piece states, “GM started October with an 82-day supply based on September’s sales pace, up 18 from Sept. 1. Stocks of the Chevrolet Silverado pickup rose to a 115-day supply from 98, and the GMC Sierra pickup rose to 98 days from 87.” GM no longer likes to discuss truck inventory, which it has had a past history of stuffing to manipulate earnings, but analysts should ask some tough questions during GM’s earnings’ conference call about where truck inventory levels are. The tricky strategy of raising truck prices at the same time that incentives are raised should also be questioned. Judging from GM’s past explanations, even if such questions are allowed to be asked, I doubt that the answers will be credible.

I just don’t get why GM has to continue to play its politically dishonest approach to all challenges it faces. It seems that the governmental intrusion into the company has left an indelible template that sets forth a strategy by GM of smoke and mirrors along with media manipulation to portray an image of an efficiently managed entity operating with an eye on the bottom line when in reality it is most concerned with public perception. The true bottom line is, if GM does not focus on building high quality vehicles at the best value in a very competitive market instead of being concerned with perception, all of the excuses in the world will not prevent a second trip for the company through bankruptcy court.

Mark Modica is an NLPC Associate Fellow.


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