Whether it's in sports, in business, or in comic books, the world loves a good rivalry -- and few can match the longtime crosstown competition between General Motors (NYSE: GM) and Ford Motor Co. (NYSE: F). Despite their decades-long duel for prestige and market share, the two largest Detroit automakers also have much in common, including incredible outlandish price tags in November.
Show me the money
Everybody knows Detroit's bread-and-butter products are SUVs and full-size pickup trucks. Those vehicles command juicy margins and keep the carmakers' lights on. Better yet, as the manufacturers have crammed more and more technology and features into them, they've been able to push average transaction prices higher, driving incremental revenue at a time when U.S. sales are plateauing.
In fact, General Motors' strong SUV sales drove its companywide average transaction prices (ATPs) above $37,000 for the first time ever. Price tags were up more than $650 from October, and more than $1,400 compared to the prior year's November. That well outpaced its competitors: GM's ATPs were an impressive $4,500 above the industry average, and almost $2,000 higher than any domestic automaker.
What's of equal importance to investors is the level of incentive spending. In November, GM's incentives were estimated at 12.9% of ATP, according to information from J.D. Power PIN. That's roughly the industry average. However, it was down 30 basis points from October and 80 basis points year over year. And it's good news for investors when ATPs rise while incentives remain flat, or better yet, fall.
While Ford's ATPs might have lagged those of GM, the highly profitable F-Series pickup line posted some incredible numbers, with its best November sales result in 16 years. The popular Super Duty and the new 2018 F-150 helped push truck ATPs $3,800 higher to a staggering $47,100 -- essentially entering luxury pricing territory. The F-Series is on track for a tremendous year: Sales are up more than 10% with one month remaining on the calendar.
In addition to the F-Series, Ford's SUV segment thrived last month with a 13.3% sales gain over the prior year. That increase, which almost doubled Ford's 6.7% companywide gain, was driven by retail rather than fleet sales, which is even better news for the bottom line. In fact, Ford brand SUVs recorded a 11.6% gain at retail for November.
"2017 has been the year of the SUV," said Jeremy Acevedo, manager of industry analysis at Edmunds, said in an email. "Consumers have proven time and time again this year that they're not afraid of the bigger price tags, higher APRs and longer loan terms."
Despite U.S. sales volumes plateauing, Detroit's two largest automakers are still moving large numbers of highly profitable SUVs and full-size trucks. Unless matters take a surprising shift in December, investors should see solid fourth-quarter results from both General Motors and Ford.
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