General Motors launched a new version of its popular Chevy Silverado pickup for the 2013 model year. The redesigned Silverado (and its close cousin, the GMC Sierra) was intended to help GM gain market share from segment leader Ford in the full-size truck market. Just as important, GM wanted to improve its average transaction prices.
For the first year after the new Chevy Silverado went on sale, it seemed like a flop. The average transaction price had improved, but GM continued to lose market share in the full-size truck segment.
The new Chevy Silverado struggled in its first year on the market. Image source: General Motors.
But in the past year or so, the new Silverado has finally come into its own. Helped in part by Ford's complex transition to the aluminum-body 2015 F-150 -- which has dented production at GM's top rival -- the 2015 Chevy Silverado has posted stellar sales. In fact, it could almost single-handedly haul GM's earnings higher this year.
Full-size pickup sales surge in JuneJune was a particularly good month for GM's truck lines -- but especially the 2015 Chevy Silverado. Chevy dealers delivered 51,548 Silverados last month, up 18.4% year over year. Meanwhile, GMC dealers delivered 18,618 Sierras, up 20.8% year over year. That pushed GM's total full-size truck deliveries above the 70,000 mark for the second straight month.
This sales performance easily outpaced Ford's 55,171 F-Series deliveries. As a result, GM's share of the full-size truck market is as good as it has been in several years. Not that long ago, Ford's F-Series trucks regularly outsold the Chevy Silverado and GMC Sierra combined.
Ford F-Series sales have undoubtedly been constrained by inventory availability this year. Even so, it was notable that GM posted a strong double-digit increase in full-size truck deliveries while F-Series deliveries were down 8.9% year over year. F-Series inventory should be improving by now -- but apparently not enough to allow Ford to retake market share from GM.
The 2015 Chevy Silverado will bring in lots of profitGM's success in the full-size truck market hasn't been a one- or two-month anomaly, either. Looking at the first half of 2015 as a whole, Chevy Silverado sales are up 14.6% year over year, while GMC Sierra sales have risen 8.2%. Average transaction prices have remained strong, too.
On a combined basis, dealers have delivered 376,672 full-size GM trucks year-to-date, edging out Ford's 357,180 F-Series deliveries. If the 2015 Chevy Silverado and GMC Sierra experience a similar level of sales growth in the second half of the year, GM dealers would deliver nearly 100,000 more full-size trucks than in 2014.
GM is outselling the 2015 Ford F-150 so far. Image source: Ford Motor Company
Considering that full-size trucks can generate $10,000 or more of profit -- especially when decked out with lots of options -- this means that the Silverado and Sierra may deliver nearly $1 billion in incremental operating profit this year.
Midsize trucks are helping, tooEven for a company as big as General Motors, $1 billion in incremental profit is a huge number. But the 2015 Chevy Silverado isn't the only truck that's hard at work for GM -- it's also having huge success in the midsize truck market.
GM reintroduced the Chevy Colorado and GMC Canyon midsize trucks last year in a bid to diversify its truck lineup and penetrate an underserved market segment. Ford exited the midsize truck market a few years ago when it stopped selling the Ranger in the U.S., leaving the Toyota Tacoma as the main competition for GM's new midsize trucks.
Many analysts worried that by offering these cheaper trucks, GM would cannibalize more profitable sales of full-size trucks. But based on the strong sales of the 2015 Chevy Silverado, this doesn't seem to have been a problem.
GM's midsize trucks have earned great reviews, and buyers have been snapping them up as fast as General Motors can make them. With such robust demand, GM doesn't need to offer much in the way of incentives, so these trucks will also contribute plenty of profit, albeit less than the Silverado. It's just one more way that General Motors is profiting from its strong position in the U.S. pickup market.
The article The 2015 Chevy Silverado Truck Is Hauling More Than Ever (Profit, That Is) originally appeared on Fool.com.
Adam Levine-Weinberg owns shares of General Motors. The Motley Fool recommends Ford and 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.
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