A new premium Denali version of the midsize GMC Canyonpickup has helped boost its popularity -- and its average transaction prices.Image source: General Motors.
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General Motors (NYSE: GM) said that its U.S. sales fell 1.7% in October, hurt by fewer selling days and a planned 19% reduction in sales to rental-car fleets. But GM's more profitable retail sales rose 3% last month, likely outperforming the overall market.
The key numbers: How GM's brands performed in October
Data source: General Motors. YOY = year over year.
What worked (and didn't) for GM in the U.S. last month
Year to date, the Chevrolet brand's retail sales in the U.S. are its best since 2006. At a time when rivals are struggling to sell midsize sedans, Chevy's midsize Malibu is doing well: Retail sales of the Malibu were up 39% from a year ago. (Overall sales were down, reflecting reduced rental-fleet sales.) Chevy's Suburban, Tahoe, and Trax were all up by double digits at retail, as was its midsize Colorado pickup.
Likewise, the upscale GMC brand is also posting strong sales of its SUVs and trucks, along with fast-growing average transaction prices at retail. GMC's Acadia (up 17% at retail), Yukon (up 26% at retail), and midsize Canyon pickup (up 15% at retail) are all premium-priced, highly profitable products. And while GM's overall full-size pickup sales were down last month, the premium GMC Sierra had its highest average transaction price ever at $46,876.
The Cadillac luxury brand, however, continues to be a work in progress. While its average transaction price of $55,058 was up more than $2,300 from a year ago, sales of three of its four sedan models were down by more than 25% from a year ago. (The fourth, the CT6, is new.) Only the big Escalade SUV and the new XT5 crossover appear to be gaining any ground.
The all-new 2017 Buick LaCrosse sedan is already beating its predecessor's lacklustersales performance at retail. Image source: General Motors.
Buick is also struggling a bit, although the brand managed a 7% year-over-year gain at retail. Sales of the new (and considerably improved) LaCrosse sedan were up 13% at retail, GM said, and the Envision crossover had its best month since it was launched in the U.S. earlier this year. The small Encore crossover managed an 8% overall sales gain, but sales of the Regal sedan and big Enclave crossover were downsignificantly from a year ago.
Analysis: A good month in a tough market
Despite the overall year-over-year decline in sales and weakness at some of GM's brands, there was still a lot to like in GM's report for October.
First and foremost, GM's U.S. retail market share rose 1.6 percentage points to 18.1%, its highest level in October since 2009. That's a big deal. Historically, GM was very reliant on sales to commercial and rental-car fleets. But under CEO Mary Barra, and backed by much-improved products, the company has worked hard to change that, making a point of focusing on retail sales gains in the U.S.
Why? Profitability. Retail sales, generally speaking, are more profitable than fleet sales -- particularly sales to rental-car fleets. Not only are rental-fleet sales heavily discounted, but the rental vehicles depress used-car prices when the rental-car companies sell them off in bulk a year or two later.
(Why does GM care about used-car prices? Lower prices make it harder for GM to offer competitive lease deals, as leases are priced around the expected value of the vehicle at the end of the lease's term.)
GM is also getting very good prices for its products. Its average transaction price in October, which reflects retail transaction prices after incentives, was $36,155, up over $1,000 from a year ago. That bodes well for GM's continued profitability even though the overall U.S. market may be past its cyclical peak.
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John Rosevear owns shares of General Motors. 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.