The Reason Behind GM’s Aggressive Marketing Campaign For Chevy Silverado
GM’s new vehicle sales in the U.S. car market took a huge hit in the month of May. The Detroit based auto makers overall new units sold declined by a staggering 18% in May compared to sales in May 2015. The decline was even across all four of GM’s main brands- with sales of Chevrolet declining 18.6%, GMC 14.3%, Buick 22.4% and Cadillac 16%. Prior to May, GM’s performance in the U.S. wasn’t so bad- for the January to April period, overall sales had declined by 1%, with Cadillac sales declining by 11.5%. Excluding the impact of Cadillac, sales were just about flat.
For the full year, GM’s sales have declined by 5%, with sales of Cadillac declining by 12.5%.
While the decline in sales of Cadillac is troubling for GM investors, since luxury cars command the highest margins and are the most profitable segment, equally worrying is the decline in sales of the pick-up truck Chevrolet Silverado. GM’s year of record profitability in 2015 was driven by record sales of Chevrolet Silverado and GMC Sierra combined as Ford retooled its factories for the manufacturing of an aluminum bodied 2016 version of the F-150 pick-up truck. Now with Ford’s factories and inventory levels at Ford dealerships at full capacity, Ford has regained its lead at the expense of GM. This is one reason why GM has launched an aggressive marketing campaign that claims that Chevrolet Silverado’s high-strength steel bed is more resilient than the stamped aluminum bed of the F-150. It remains to be seen whether this campaign can turn around GM’s fortunes.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for General Motors
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