Strong August Sales Put General Motors Back On Track

September 5th, 2017 by Trefis Team
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After a disappointing June and significantly lower sales in July, General Motors (NYSE:GM) bounced back by reporting a 7.5% year on year increase in its U.S. sales in August. With retail deliveries up by 4% the company estimated a one-half point increase in the retail market share for this month. These results are particularly positive since sales remained strong despite Hurricane Harvey’s impact in Texas. The success of General Motors’ crossovers was the key driving factor behind the strong August sales. Sales of the company’s Cadillac XT5 crossover were up 28% in August, the second best month for this model since its launch. Similarly both its Buick models — the Encore and the Envision — reported strong sales growth at 31% and 78%, respectively. While sales of sedan’s are slowing down, demand for crossovers is rising in the U.S.  Crossovers provide the comfort of an SUV with the fuel economy of a car, and hence offer the “best of both worlds.” General Motors’ focus on crossovers, which are also more profitable compared to small size sedans, has ensured strong sales growth for the company.

Crossovers Likely To Be Key To Profitable Growth

General Motors’ retail crossover share in Q2 2017 was up 24% year over year, making this its best quarter in crossover sales. While July was a disappointing month with a nearly 15% decrease in sales, the company is back on track in August with high crossover sales. The company is launching four more crossovers in the second half of 2017 and we believe this segment will remain the key driver of profitable growth for the company through the next year. For August 2017, the average transaction price for the Cadillac increased by $1,400 to $ 53,300, which is a strong indication of the profitability of this model.

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While the passenger car segment in the U.S. is softening, we believe General Motors is in a strong position due to its crossover line which is growing in popularity. We believe this segment will remain a key growth driver for the company in the next few years.

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