Chevy Silverado Struggles With Sales

Source: courtesy of General Motors General Motors Co. (NYSE: GM) has been struggling all year with sales of its Chevy Silverado pick-up. The Silverado is historically the top selling vehicle in the U.S. for the largest of the Big Three. It sits just behind Ford Motor Co.’s (NYSE: F) F-series which has been the market leader for most of the last four decades

Over the first four months of 2014, Silverado sales are off by 3.5% to 150,512. Total U.S. car and light truck sales are up 3.1% to 4,980, 081 during the same period. However, Silverado sales are rarely measured against the market at large. Pick-ups are by far the best selling vehicles in America. So, the Silverado’s primary competition are the F-series, and Chrysler’s Dodge Ram.

F-series sales have risen 3.9% over the first four months to 236,745. Ram sales have surged 22.5% to 133,580. The Silverado is not only losing market share. It risks falling behind Ram as the second best selling truck in the market.

Chevy has responded to the Silverado problem with very deep discounts. The sales figures show these have not worked very well so far.

Currently, Chevy’s most aggressive offer for the Silverado cuts $8,600 off one version of the pick-up — the 1500 Double Cab All Star Edition. The truck is normally one of the more expensive Silverado editions, priced at at over $35,000. Part of the truck’s high price is due to its eight-cylinder engine, and 4WD. Each of these two are typically features for which car companies charge large premiums.

The $8,600 is broken into three pieces. The first is a simple $4,750 allowance. The second is a $3,100 discount off the MSRP, but that’s good only for May. The last is a $750 option discount. The May discount is not much different from ones offered earlier this year, and may be repeated in June, if sales remain very soft

GM has the traditional problem of how deeply to discount poorly selling cars and trucks. In the case of pick-ups, they are high-volume and, usually, high-profit margin vehicles. Chevy is facing the worst of both the sales and profit math. GM needs winners now because of its massive recall trouble. For the time being, Silverado can’t carry that load