Chevy Silverado sales rose 24% in February. Premium trim lines like this High Country model helped boost average transaction prices, too. Source: General Motors.
General Motors had some happy news to report on Tuesday: Sales of its Chevy Silverado pickup rose 24% last month.
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Sales of GM's trucks, including SUVs, vans, and pickups, were up 36% in February. That's a great result that should help drive strong first-quarter profits for GM.
But a lot of that gain is coming at rival Ford's expense.
Tight supplies of Ford trucks have given GM an opportunity The story here is that Ford is working to ramp up production of its all-new 2015 F-150. The new Ford has aluminum body panels, and the company has had to make extensive changes to its two truck factories in order to build it.
One of those factories, in Dearborn, Michigan, is already up and running: It began building the new F-150 in late November. But work at the other factory, near Kansas City, Missouri, is still ongoing. Ford says that it won't be producing new F-150s for sale until late this month.
Ford's Dearborn, Michigan, truck factory has begun producing its all-new 2015 F-150, but its Kansas City, Missouri, plant won't be up to speed until late March, Ford said on Tuesday. Source: Ford Motor Company.
That means that supplies of Ford's all-new truck are short. Ford's dealers are selling down the last of its old 2014-model trucks, along with a growing percentage of new ones. But that percentage is still small: Ford said on Tuesday that just 21% of its F-150 sales in February were of the new 2015 models. That has affected overall retail sales of the F-Series, which were up just 7% in February.
The good news for Ford is that the new trucks are selling quickly and getting good prices. Ford said that its new F-150s are spending an average of just 18 days on dealer lots before being sold -- less than any other Ford model. Higher-level trim lines like the King Ranch and Platinum models are moving even more quickly. And they're getting good prices: Average transaction prices for the F-150 (new and old models) were up $2,000 last month, Ford said.
That all bodes well for the longer-term prospects of Ford's new truck. But right now, supplies are tight -- and GM is taking full advantage.
GM's expanded truck lineup is generating big sales gainsGM said on Tuesday that the Silverado had 27.2% of the U.S. pickup market in February, up 1.5 percentage points from a year ago. A lot of that gain has come at Ford's expense, as Chevy dealers have moved aggressively to take advantage of tight supplies at rival Ford's stores. (The Silverado is also doing well against Fiat Chrysler'sRam pickup, which gained just 7% last month.)
But unlike years past, GM isn't goosing Silverado sales with huge discounts: Average transaction prices on the new Silverado were up almost $1,700 over year-ago totals, not far behind Ford's pricing gains. Strong truck sales and prices helped GM's profits beat expectations last quarter, and it appears that another strong quarter is taking shape.
GM introduced a new wrinkle in the pickup wars last year: Its new midsize Chevy Colorado and GMC Canyon. GM is still ramping up supplies of its new midsize trucks, and total sales numbers are still small: Just 6,583 Colorados were sold last month, compared to 45,395 Silverados. But demand is very strong: GM says that Colorados are spending just 15 days on dealer lots -- turning over even faster than the new F-150.
The Colorado and GMC Canyon are giving GM's total pickup sales a nice boost: All together, GM sold 37% more pickups in February than it did a year ago. And GM's gains extended to its big (and hugely profitable) truck-based SUVs: Tahoe sales rose 49%, Suburban sales were up 118%, GMC Yukon sales rose over 43%, and the Cadillac Escalade posted a 92% gain.
Will GM be able to hold on to its market-share gains?GM, like Ford, did see car sales slip significantly in February -- not a surprise given the harsh weather in many parts of the country. That could be a concern for both automakers if the trend continues as the weather improves, but strong truck sales continue to be good news.
But after a weak start last year, the Silverado and GM's other new trucks and SUVs have started to take off -- without huge profit-robbing discounts. That's great news for GM shareholders -- but will GM be able to hold on to its market-share gains once Ford's truck factories are back up to full speed? We'll find out this summer.
The article GMs Chevy Silverado Is Making Big Gains at Ford's Expense originally appeared on Fool.com.
John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. 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.
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