No longer a rental-car darling: Retail sales of the redesigned Chevrolet Malibu jumped 45% last month. Image source: General Motors.
Continue Reading Below
General Motors said on Tuesday that its U.S. sales dropped 4% in April, as a 3% gain in retail sales wasn't enough to offset a planned reduction in GM's sales to rental-car fleets.
What went well for GM in April: Trucks, SUVs, and the hot Chevy Malibu
Despite the overall year-over-year sales decline, GM had some big things to brag about in its April results.
First and foremost, combined sales of GM's Chevrolet Silverado and GMC Sierra pickups topped the significant 70,000 mark, finishing the month just a few hundred sales shy of arch-rival Ford's F-Series line. As a group, retail sales of GM's trucks were up a combined 19% over year-ago results.
GM's all-new (and hugely improved) Chevrolet Malibu continued to shine as more and more retail buyers were drawn to the extensively revamped sedan. Sales of the Malibu rose 25% in April, outselling Ford's long-popular Fusion. Better yet, the Malibu's retail sales rose 45% year over year, showing that its strength isn't coming from rental-fleet sales. Through April, the Malibu has posted its best year-to-date retail sales results since 1980, GM said in a statement on Tuesday.
GM's high-profit truck-based SUVs are also shining, with the Chevrolet Tahoe and Suburban and the GMC Yukon all posting strong results. At the other end of the size spectrum, the small Chevy Trax (up 46% at retail) and Buick Encore (up 39% at retail) also continued tot draw new buyers to showrooms.
Continue Reading Below
What went less well: Small cars and Cadillacs
GM has an all-new Chevrolet Cruze en route to U.S. dealers, and not a moment too soon: Cruze sales were down over 32% in April, likely a key casualty of GM's decision to reduce its sales to rental-car fleets. Sales of the upscale Buick Verano, another compact sedan, were down nearly 19%.
Cadillac's U.S. sales fell 29% year over year. That's not a surprise: Nearly all luxury brands are seeing a significant shift in buyer preferences away from sedans and toward crossover SUVs, and Cadillac has just one crossover at the moment: the midsize XT5.
The XT5 is in the process of replacing Cadillac's old SRX crossover. Dealers are selling off the last SRXs (sales were down 54% in April) and just beginning to receive supplies of the new XT5. XT5 inventories are still very thin, with just 304 sold in April, but sales will almost certainly rise significantly as more XT5s become available over the next few months.
Meanwhile, again not surprisingly, Cadillac's ATS, CTS, and XTS sedans all posted double-digit year-over-year declines. But GM found a shred of good news to highlight: Despite the big sales declines, all three Cadillac sedans nonetheless gained retail market share in their respective segments.
About that rental-fleet decline
As part of an effort to boost its profit margins in North America, GM has been reducing its sales to rental-car fleets, traditionally a low-margin sales channel. GM said its rental-car fleet sales were down almost 18,000 units in April year over year, enough to account for a 6.6% year-over-year sales decline all by itself.
Investors should note that while it is reducing sales to rental-car fleets, GM is also working to increase its sales to commercial and government fleets, typically more profitable sales channels. GM's commercial fleet sales grew 4% in April, while its government-fleet business grew 21%.
The upshot: GM continues to perform well in its home market
GM sales chief Kurt McNeil said in a statement that the company's incentives were flat year over year, another sign that the General is continuing to emphasize profitability over incremental sales. Together with the ongoing discipline around rental-fleet sales, the moves to increase more profitable commercial and government fleet sales, the continued success of GM's trucks and SUVs, and the impressive results for the new Malibu, GM appears to be executing very well in its home market.
The article General Motors: Fleet Sales Drop, but Retail Sales Rise originally appeared on Fool.com.
John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.