GM's Truck-loads of Cash: Will It Put The Brakes on Toyota?

[Big Dog]

Originally Posted by 1931Chevy

http://www.cnbc.com/id/19690920
Forget the ads touting which full size pick-up has more hauling capacity, or which one can stop just before going over the edge of a cliff, or even which truck makes you feel more American, rural, or cowboy. None of that matters.

Here's what talks with truck buyers: cash. The more the better. And right now, pick-up buyers are picking up deals that have them sitting in the catbird seat. In fact, GM is doubling the cash back it's offering people who buy a new Chevy Silverado or GMC Sierra. That's an extra $1,000 on top of 0% financing.

Why would GM throw out such a an offer on new trucks that just came
out last fall? To keep up with Toyota , that's why. Yes, the Japanese automaker is finally hurting the Big 3 where it really hurts--in pick-up sales.

Last month, thanks to generous deals including 0% financing, Toyota Tundra sales shot up 21%. Meanwhile GM's total sales in June plunged thanks to weaker than expected truck sales. When I talked with people in motown last week, it was clear the hit in truck sales is not sitting well with American auto executives.

Since GM is #1 in trucks, and trucks are the vehicle in terms of profit, the boys in Detroit are giving dealers more ammunition to win over buyers. Will it help stop the erosion is sales? Perhaps at first. But this is not a long solution. Greater incentives hurt GM profit margins on trucks

Hello..mis-leading table of 1. GM is not matching the $4000. The $4000 is on Silverado Classics, the GMT800, not the GMT900. The $4000 is on HD 2500 and 1 Tons. Toyota is offering $4000 on the All World Tundra. Sales up 21% from what? From last years Tundra...BIG deal. The reason you're only seeing certain models is that is what Toyota wants people to buy. Those people are current Toyota owners, people used to being told what to buy. Guess what? The AMERICAN truck buyer is different. He/She wants choices. The cattle farmer I just sold a 3/4 GMT900 W/T to yesterday isn't interested in a LOADED up CrewMax no matter what the rebate. He wants a diesel powered work truck not a rice powered boulevard cruiser to pull his 5th wheel trailer, not that the Toytoa could pull it in the 1st place. Put down the Toyota flavored kool-aid and realize new player to the game isn't necessraily better. GM/Ford/Dodge UAW still build the BEST trucks on the road and I think Toyota having to put 4000 on their NEW truck is a worse sign for them than GM putting 4000 on the old body style Silverado.

[ghughes]

"General Motors and Ford can amortize fixed costs such as design, tooling, advertising, etc. over many more units. General Motors' and Ford's plants have comparable quality and efficiency of Toyota's plants " -
you cannot look at the fixed costs of just one model - its your corpwide fixed costs (very high for GM) that matter most. Toyota lovingly hands off a lot of their fixed costs to the Japanese taxpayer.

[hunchman]

" Why would GM throw out such a an offer on new trucks that just came
out last fall? To keep up with Toyota , that's why. Yes, the Japanese automaker is finally hurting the Big 3 where it really hurts--in pick-up sales "

The Japanese automaker is not hurting the Big3 rather the american truck buyer is. The Japanese just built the trucks because they know americans will flock to buy them and stick it to the Big 3.

[ericmvest]

Originally Posted by ghughes

"General Motors and Ford can amortize fixed costs such as design, tooling, advertising, etc. over many more units. General Motors' and Ford's plants have comparable quality and efficiency of Toyota's plants " -
you cannot look at the fixed costs of just one model - its your corpwide fixed costs (very high for GM) that matter most. Toyota lovingly hands off a lot of their fixed costs to the Japanese taxpayer.

I did say you have to take legacy costs out of the picture. Last I heard General Motors' pension fund was fully funded. The problem is the health care benefits. Hopefully the Big Three and the UAW can come to an agreement that fixes this cost problem. Dana and Goodyear recently negotiated agreements with the UAW and USW to address retiree heath care benefits in what seems to be a positive way. A lot is hinging on the next UAW contract.

[Hitman1970]

It makes you believe that they built the Tundra to sell at fire sale prices and take away the last profitable vehicles for the domestics. This couple for $8000 SUV hybrid systems are definately not good news for GM. Businesses do not exist to make little or no money.

Most of my peers talk about the end of Detroit like it is inevitable. They do not even contemplate the ripple effects if this were to happen.

[Al465]

Originally Posted by Havasavana

From the article: "If they have to keep rolling out 0% financing, the guys at Toyota will do that."

Toyota WILL sell their trucks. If they want to sell all the factories can make, they'll do it. GM is falling into a trap, plan B from Toyota is my guess, to chase Toyota down the price war path. Toyota would have preferred to sell at MSRP or close to it, but that plan didn't work. So they'll do what they have to do. If it were GM against just Toyota, I think GM would be ahead to let Toyota sell their production limit and keep their, GM's, incentives low. But it isn't just Toyota, it's also Ford and Dodge and GM has to compete with them. It's been obvious for months that this credible truck from Toyota will show the way for the final destruction of GM. Toyota doesn't have to outsell GM in trucks, just to take away enough profit so that GM sinks. I'm afraid the new Sequoia will do the same to GM's big SUVs.

F*** Toyota!!!!

[JM9777]

If GM is offering "truck-loads" of cash, what do they call what Toyota is offering?

It's amazing how few Tundras you saw until Toyota put $5000 on the hood.

[vxl]

Originally Posted by Hitman1970

Most of my peers talk about the end of Detroit like it is inevitable. They do not even contemplate the ripple effects if this were to happen.

The bankruptcy of GM and/or Ford would bring on a recession - it was always reckoned that every 1 direct emplyee supported 10 others in supplier companies (let alone the impact on local communities).

Up until now I've been positive about GM's survival but every month's ever declining market share makes me now believe Detroit is finished - GM is chasing market share downwards. Toyota has built a sufficient number of US plants to avoid any political backlash.

[E. Haskell]

Didn't Toyota usually sell around 150k Tundras around the peak years of the previous Tundra? I would expect a new truck to atleast match that.

If they sell 200k this year, that is 50k more trucks. 50k spread out among Ford, Dodge and GM isn't going to be a huge sales decrease for any of them. Granted, they probably don't want to let things snowball to quickly.

[AndrewGS]

I honestly do not understand why the hell they don't use this money to advertise the trucks' strengths over their competition. They are taking the low road to sales.

[ericmvest]

Originally Posted by vxl

The bankruptcy of GM and/or Ford would bring on a recession - it was always reckoned that every 1 direct emplyee supported 10 others in supplier companies (let alone the impact on local communities).

Up until now I've been positive about GM's survival but every month's ever declining market share makes me now believe Detroit is finished - GM is chasing market share downwards. Toyota has built a sufficient number of US plants to avoid any political backlash.

Don't get depressed and give up. General Motors had tougher situtations in 1909 and 1920 and came back. General Motors fans are going to have to keep a firm upper lip.

[mkaresh]

Originally Posted by DaJudge

That's the way the American media works. I just don't understand not rooting for your own team.

The media aren't supposed to be rooting for anyone. Do you want them to be unbiased, or to root for the home team?

The problem is that many people think the media is biased when it doesn't root for the "home team."

A "home team" that, like many in sports, could not care less about its fans.

[mkaresh]

Originally Posted by vxl

The bankruptcy of GM and/or Ford would bring on a recession - it was always reckoned that every 1 direct emplyee supported 10 others in supplier companies (let alone the impact on local communities).

Up until now I've been positive about GM's survival but every month's ever declining market share makes me now believe Detroit is finished - GM is chasing market share downwards. Toyota has built a sufficient number of US plants to avoid any political backlash.

Maybe, but there aren't nearly as many of those "direct jobs" anymore. And the rest of the country doesn't care about a recession in the Midwest.

[minnfang]

Originally Posted by mkaresh

The media aren't supposed to be rooting for anyone. Do you want them to be unbiased, or to root for the home team?

The problem is that many people think the media is biased when it doesn't root for the "home team."

A "home team" that, like many in sports, could not care less about its fans.

I don't think the media needs to root for the home team. I would just like for parts of it to stop sounding so happy when the "away" team makes gains.

[Smaart Aas Saabr]

Originally Posted by Z06ified

I agree. Diesel will be the quickest way to catch Toyota asleep at the wheel in the 1/2 ton truck market. Toyota seems to be very adverse to diesels, and their "everything hybrid" strategy is not going to work, especially in the truck market. Traditional pickup buyers will choose a diesel 9 times out of 10 over a hybrid if they are concerned about fuel economy with their truck.

I don't know why the diesel option disappeared with the 1/2 ton pickups. You used to be able to get the Oldsmodiesel, then finally they replaced that with the Detroit Diesel 6.2, then the 6.5... now what happened?