DETROIT – New vehicle sales in the United States are expected to rise in February, but General Motors’ decision to cut production of large pickup trucks at a US plant points to new challenges for Detroit’s automaker.
Detroit’s major pickup truck brands are sitting on growing inventories of unsold vehicles, according to Cox Automotive data provided to Portal.
As supply chain shortages ease, Detroit automakers’ resolve to keep inventories tighter than before the pandemic was being tested. Automakers may have to choose between reducing production to avoid price cuts or offering richer discounts to boost sales volumes, dealers said.
GM dealers are stocking more than 100 days of Chevy Silverado pickups, which Cox says reflects more vehicles on the ground and a seasonally slow pace of sales. Competitor Stellantis NV has over 100 days in stock for ram half-ton and heavy-duty pickups. According to Cox data, Ford Motor Co has F-150 in stock for 92 days.
A GM spokesman said Cox’s numbers do not accurately reflect GM’s inventory situation. GM does not release detailed inventory numbers. However, he said GM is acting to support its pricing strategy, which relies on keeping inventories leaner than in the past.
Stellantis said in a statement that no downtime is planned at any of its North American plants, but is constantly reviewing its inventory levels and making production adjustments as needed.
Industry consultants JD Power and LMC Automotive forecast on Friday that US car and light truck sales would hit an annual pace of 14.6 million vehicles in February. That’s more than a year ago, but still well below pre-pandemic levels.
Revenue growth in February was led by a 54% increase in sales to fleet customers, Power and LMC said.
Total unsold vehicle inventories are still low, but “still not enough to meet monthly demand,” Thomas King, president of data and analytics at JD Power, said in a statement.
GM said its decision to shut down the Fort Wayne, Indiana assembly plant that builds Chevrolet Silverado and GMC Sierra pickup trucks for two weeks beginning March 27 was made to “maintain optimal inventory levels at our dealerships.”
Who blinks first?
GM, Ford and Stellantis dominate the US market for large pickups and have raised prices for their trucks to record levels over the past two years as the supply chain struggles with limited production.
Dealers contacted by Portal said some customers are now waiting for better deals or postponing purchases because the combination of high prices and higher interest rates is putting vehicles out of reach. Automakers face a choice between lowering prices through bigger discounts or subsidized loans, or keeping inventory tight.
“What they’re doing is playing what I call the blink game – who blinks first. Especially for trucks,” said Ohio dealer Rhett Ricart, whose Ricart Automotive Group sells Ford and GM trucks at various stores.
Brad Sowers, president of Missouri-based Jim Butler Auto Group, said high prices are dampening demand. However, he wrote in an email, “Manufacturers don’t want to flood the market and be forced to quadruple stimulus spending to stimulate demand, which will eat into their margins.”
Some discounts show up in the large pickup segment. Ram is offering 2.9% financing for 72-month loans on select Ram 1500 trucks.
Power and LMC said fewer vehicles were sold above manufacturer’s suggested prices in February and that the average discount increased 4.7% to $1,335 per vehicle. That’s still well below pre-pandemic levels, Power-LMC said.