Supplies of highly profitable pickups from General Motors are at historically low levels months after the company restarted production following nationwide plant shutdowns this spring due to the coronavirus pandemic.
Supplies of GMC Sierra pickups on dealer lots are at 20 days or less compared with a typical supply of 75 days to 90 days, according to Duncan Aldred, head of the GMC truck brand. He attributed the low supplies to continued demand for the pickups throughout the coronavirus pandemic despite the shutdowns.
“We’re continuing to sell faster than we build,” he told reporters this week. “That’s not a comment on the build schedule, that’s a comment on how fast we’re selling them.”
The plants that build the vehicles in the U.S. and Mexico were shut down for about two months this spring due to the coronavirus pandemic. The pandemic was a second blow to the company’s production and inventory levels following a 40-day UAW strike that ended in October.
While low supplies generally mean higher transaction prices and profits, they also can strain dealer operations and cause them to lose customers due to longer wait times or models being unavailable at purchase. Other automakers with higher inventory levels also can offer better deals to lure customers.
Aldred said that is not the case for the GMC Sierra, saying the brand has “its highest segment share in recent history” despite its “lowest stock in history.” He also noted that the Sierra light-duty and larger heavy-duty models have the highest average transaction prices of about $47,500 and more than $65,000, respectively.
But dealerships such as Gulf Coast Chevrolet Buick GMC in Texas — America’s top-selling truck market— need more pickups on their lots. Craig DeSerf, executive manager of the dealership, said pickups typically account for 75% of his inventory. They’re now only 25%.
“Out here, south of Houston, it’s truck country. That’s all we do,” he said. “This is pickup truck country, big time.”
DeSerf said some people get upset that there’s not inventory but it’s still better than having too much from a business standpoint. “Not to be greedy, it’s better this way than the other way,” he said.
Heading into Labor Day weekend, a significant sales time for dealers, J.D. Power reports there were just over 500,000 pickups on dealer lots. That’s compared with 900,000 entering September last year after the Labor Day selling weekend.
Pickup sales have remained relatively resilient this year despite the pandemic. Sales of full-size pickups such as the Sierra models are only off 8.8% through August in the U.S., according to Edmunds, which said the overall market was down 22%.
Retail sales, or those to individual consumers, are even narrower. J.D. Power reports retail pickup sales are only off 3.5% through August while the rest of the industry is off 18.9%.
Most GMC pickups are being sold to customers before they arrive on dealer lots, according to Aldred.
“I don’t know if that’s a case across the industry, but it certainly is with us,” he said. “My challenge is to keep selling them quicker than manufacturing can ever build them. Some nice, healthy competition there. We’re never going to let off the gas.”
Supplies of the Chevrolet Silverado — the Sierra’s pickup sibling under GM — are at 26 days or lower, according to GM.
Source: Business - cnbc.com
