GM Says GMT-900' Sales Target Exceeded In Jan

[FISH]

Wednesday, February 01, 2006 4:27:51 PM ET



DETROIT (Dow Jones)--General Motors Corp.'s (GM) fresh stable of full-size SUVs and a new pricing strategy are off to a good start, according to the company's top sales analyst.

Paul Ballew, GM's sales analysis manager, said Wednesday during a monthly sales conference call that the launch of the Chevrolet Tahoe, which is built on a newly designed platform designated GMT-900, is "holding in very well" in terms of dealer enthusiasm and consumer receptivity.

Analysts say it is too early to gauge the actual impact of the new SUVs on GM's sales volume, but the launch helped GM post nearly flat truck sales in January.

GM sales overall increased 6%, with the gain fueled by improved passenger car sales and a spike in fleet sales. New products for a number of brands, including Chevrolet, Hummer and Buick, are faring well, the company said.

"We delivered more than 3,000 new Tahoes in January...which exceeded our expectations," Ballew said. He said the vehicles will be more readily available in February and, "to get a full read on the 900s," analysts will have to wait until the spring. "It's early [but] we're optimistic."

Eventually, the auto maker will introduce a GMT-900 pickup truck, which could help improve GM's revenue performance. The auto maker is said to be rushing the new pickups to market in an attempt to push ahead the launch of the crucial vehicles.

Capgemini Group auto analyst Dave Hilton said GM's new products should find a strong reception due to the market's hunger for new products. "We've found that consumers are rewarding innovation with increased sales," he said. Hilton said the auto makers that are gaining the most share in the U.S. tend to regularly update products.

GM has about 60,000 of the outgoing GMT-800s in stock, which is a "well-balanced" number, Ballew said. He said the company has about 750,000 trucks in stock and total inventory is in excess of one million vehicles. GM is offering generous discounts in an attempt to rid itself of GMT-800s.

Much like competitor Ford Motor Co. (F), GM relied heavily on fleet sales to rental car firms and commercial customers to buoy January sales. Ballew said fleet sales made up 38% of total sales, up from about 30% last year, but the company is aiming to cut fleet sales by 10% in 2006 overall.

Ballew called January's abnormally high fleet penetration "a one-month aberration." He said there are certain months on the calendar, including January, when fleet sales are typically higher for "seasonal" reasons.

Earlier in the day, Ford said it will likely increase fleet sales in 2006. Auto makers have been trying to better balance fleet sales, with less dependence on rental car fleet sales that are seen as largely unprofitable. Commercial and government fleets generally represent welcome business.

GM launched a new pricing strategy in January, having cut prices by more than an average $1,000 on 80% of its vehicles. The move is an attempt to better reflect actual transaction prices and eventually cut the amount of money GM spends on incentives.

"The feedback that we're getting from both consumers and dealers is very positive," he said. The company's pricing strategy, he added, was partially responsible for about a $1,000 decline in incentive spending for the auto maker compared to last January. GM's lessened dependence on rebates and discounts mirrors an industry decline in incentive spending, Ballew said.

Ballew said GM still plans to build 1.25 million vehicles in the first quarter in North America, which is unchanged from past forecasts. In the first quarter of 2005, the auto maker built 1.18 million cars and trucks in the region.

-By John D. Stoll, Dow Jones Newswires; 313-226-1249; john.stoll@dowjones.com

[nsap]

Good to hear. This segment of the market is not likely to grow any, but will sustain a decent amount of buyers since there are many people in this country that cannot live without their large SUV (a good percent of those people are around here). I know a quick look on Ebay will show several new Tahoes (and one Yukon) that are really getting the bids on.

Hopefully this continues with the Yukon and Escalade.

[camaro_freak]

Originally Posted by FISH

Capgemini Group auto analyst Dave Hilton said GM's new products should find a strong reception due to the market's hunger for new products. "We've found that consumers are rewarding innovation with increased sales," he said. Hilton said the auto makers that are gaining the most share in the U.S. tend to regularly update products.

there it is folks, the quote of the week!

I never would have guessed consumers don't like outdated and tired products that have gone unchanged for years!

too bad GM doesn't have this guy on the payroll to tell them that.

behold, the secret formula: NEW + UPDATED PRODUCT = SALES

pure genius!

[kenman923]

That is awesome. I saw the Escalade and that's going to be a runaway hit. Now that's a truck with a tux.

[01cavalier]

They are a huge improvement, have yet to drive one though. Can't wait for the chance. Too bad a lot of fleet sales, hopefully it is as they said, an "abberation."

[Havasavana]

Originally Posted by FISH

Ballew called January's abnormally high fleet penetration "a one-month aberration." He said there are certain months on the calendar, including January, when fleet sales are typically higher for "seasonal" reasons.

"The feedback that we're getting from both consumers and dealers is very positive," he said. The company's pricing strategy, he added, was partially responsible for about a $1,000 decline in incentive spending for the auto maker compared to last January. GM's lessened dependence on rebates and discounts mirrors an industry decline in incentive spending, Ballew said.

Well, I guess that's why he's in that job and I'm not. The good news for January was increased fleet sales; the bad news was decreased retail sales. So he says the good news was a "one-month aberration", and that the bad news was "very positive". OK, not exactly. He said the "feedback" was positive. I'd think retail sales were the true form of feedback, but evidently he has some other information channel.

[Mikkoo]

If gasoline prices stay below 3 dollars per gallon, then sales should go quite well for the GM-900's. This is great news about how sales have gone so far.

[paul3230]

Originally Posted by camaro_freak

there it is folks, the quote of the week!

I never would have guessed consumers don't like outdated and tired products that have gone unchanged for years!

too bad GM doesn't have this guy on the payroll to tell them that.

behold, the secret formula: NEW + UPDATED PRODUCT = SALES

pure genius!

Brilliant!!

[steined]

With regard to the new and updated comment. I would have never considered purchasing a Trailblazer until they came out with an SS model. Now I have one in my garage (yes it fits too!!!)

There is merit to the continuous improvement theory. I think sales of SS models may well indicate that. Do I see a Tahoe SS in the near future with the 6L80E and a DOD LS2?

[1999 White C5 Coupe]

Does anyone know how many of the "more than 3,000" new Tahoes were delivered as dealer stock units and how many were ordered by customers?

[importedtuna]

This just means that SUV profit hungry dealers are ordering these things in huge numbers to replace the outdated looking '06 Suburbans / Tahoes, and that loyalists are starved for because of GM's too long product refresh cycle.

It doesn't actually mean "sales" to customers. And it doesn't mean it will be the SUV 90's all over again.

[GTOTITO]

Originally Posted by importedtuna

This just means that SUV profit hungry dealers are ordering these things in huge numbers to replace the outdated looking '06 Suburbans / Tahoes, and that loyalists are starved for because of GM's too long product refresh cycle.



It doesn't actually mean "sales" to customers. And it doesn't mean it will be the SUV 90's all over again.

Here in so. Florida they are selling 06 Tahoe's and suburbans left and right. The dealer I know have sold most of their 06 trucks, In January 06 we sold 267 cars and trucks, 203 where trucks, and 12 07 Tahoe's and we just order more 06 and 07 because we ran out of them. Most of 06 are selling 500-1000. over msrp and 07 Tahoe's 5k over msrp so I don't know from where you are getting these ideas or thoughts.

I think we are doing pretty good, we have been the #1 dealer in so. Florida since 1999 and will continue to be. We always out sell the Toyota dealer across the street, and we are always doing competition in sales and we always beat them with our old looking models like you say, the sad part is that their dealer lot is bigger than ours.

</IMG>

[mgescuro]

Originally Posted by FISH

Wednesday, February 01, 2006 4:27:51 PM ET

Wait.... no side torso airbag???

[Rayzilla]

Originally Posted by 1999 White C5 Coupe

Does anyone know how many of the "more than 3,000" new Tahoes were delivered as dealer stock units and how many were ordered by customers?

Generally "delivered" indicates that the trucks were sold.

[Rayzilla]

Originally Posted by mgescuro

Wait.... no side torso airbag???

Oficially the GMT-900 design team found that with the new, stiffened structure that the addition of the torso bags would only marginally increase safety.

An IIHS study supports this, they found on most cars that the torso bags decrease the chance of a fatal side impact marginally while the side curtains substantially increase survivability.

This bugged me when the trucks came out so I contacted the GMC expert line. I posted this info on another thread as well.