General Motors' GMC and Chevrolet dealerships have about double their normal supply of pickup trucks, an overstock problem the automaker will need to contend with before its all-new 2014 model hits the market next year.
The 2014 Chevrolet Silverado and GMC Sierra trucks are set to be unveiled to the public in January at the North American International Auto Show in Detroit, and while GM hasn't confirmed their on-sale date, the trucks are expected to arrive in showrooms in mid-2013.
Until then, GM is faced with a dilemma. It could either trim back production of the outgoing model, or it will need to significantly increase incentive spending to push trucks out of showrooms. Either move would dig into the automaker's profits.
Last month, sales of GM's trucks were down about 8 percent and the General gave up some market share to rivals Chrysler and Ford. GM contends that its competitors offered considerably larger rebates, but as Leftlane pointed out yesterday, the playing field wasn't entirely level. In anticipation of a shortened model year ahead of the 2014's launch, GM began building its 2013 models well ahead of Chrysler and Ford. As a result, it was in what might have seemed like an enviable position with few leftovers, but sales simply haven't kept pace.
The 2014 pickups' launch is crucial for GM. Not only are the Silverado and Sierra the automaker's best-sellers, they're also among its most profitable vehicles.
"If they continue to have these high inventories and then bring out the new product, that's going to hurt the launch [of the 2014s]," analyst Alan Baum told Bloomberg.
Currently, GM has about 130 days' worth of Silverados and Sierras sitting on its dealer lots, a figure that's about 20 days higher than it was a month ago. Automakers typically try to keep about 60 days' supply in stock, although an exponentially higher combination of pickup bodystyles, powertrains and trim levels means that trucks are usually more along the lines of 100 days' supply.