In its latest earnings report, General Motors revealed that its overall sales figures for the first quarter have fallen by as much as 7 percent when compared to the same quarter last year. The company is however confident that the continued appetite for its larger and more expensive sport utility vehicles and pickup trucks should pick up the slack of its falling sedan sales numbers.
The transaction price, or the final sales price that buyers pay for the actual product, has actually risen for GM's newest pickup and SUV models. For its pickups, transaction prices have risen by as much as US$8,040 when compared to the previous year's models. This indicates that buyers are now more interested in purchasing additional features on top of the base models, regardless of the added costs. According to GM, around 96 percent of their GMC Sierra full-size pickup truck had been purchased in its high-end trim level form.
In the general slowdown of overall car sales in the United States, carmakers are now banking on the rising demand for pickup trucks and SUVs. These types of vehicles are much more profitable than sedans. This means that increases in SUV and pickup sales could very well offset the effects of the auto sales slowdown in the country.
GM revealed that around 80 percent of their sales are now comprised of their SUV, pickup, and crossover models. The company has also now shifted its production capacity to produce more of these types of vehicles in response to the changing demands.
GM has already begun closing down some of its less productive manufacturing plants, specifically those that focus on producing its less lucrative sedan models. This has caused some issues with laborers and politicians as GM's move has consequently caused the loss of more than 14,000 jobs in the United States and Canada. Supporters and investor understand that the company is only doing what it can to remain profitable, while labor groups and politicians are criticizing the decision as it can negatively affect domestic economies.
Apart from announcing its earnings, GM also revealed that some of its newer model pickup trucks, such as the Chevrolet Colorado, and its smaller crossovers, such as the Chevrolet Trax and the Equinox, have actually hit record sales numbers in the first quarter. The company's GMC Acadia SUV also set a new record for the quarter. In an effort to ride the trend, GM is planning to add two new full-size pickup models by the second half of the year. The new trucks will be heavy-duty pickups that will be made under the GMC and Chevrolet brand names.
GM's share prices have risen by as much as 13 percent since the start of the year and over 5.6 percent in the last 12 months.
