GM Signals That Higher Average Transaction Prices Are Here To Stay

[Gorehamj]

 

John Goreham
Contributing Writer, GM-Trucks.com
4-30-2019

We've reported the GM sales and financial results here at GM-Trucks.com in the past quite regularly. One interesting take-away the GM financial results data being offered by the company is the increasing shift from sales unit volume to an emphasis on transaction prices. We find this interesting because there are two very different ways to look at higher transaction prices. They are good for stockholders and bad for truck buyers.

 

Back in early April, GM focused on higher transaction prices, saying that its overall average prices in Q1 had increased by $8,040 higher compared to their outgoing models in the first quarter of 2018. That stunning upward shift in prices was tempered by the fact that GM had only produced limited trims and configurations of the 2019 Silverado and Sierra, while continuing to build the previous-Gen 2018 trucks in the lower cost versions. However, this week GM released the data of its financial performance in Q1. With a bit more time and more 2019 models produced, GM updated its "good news" about transaction prices of its trucks, saying, "The company’s full-size truck launch is ahead of plan and drove strong pricing for the quarter in North America. Average transaction prices for GM’s all-new full-size crew cab pickup trucks are up $5,800 over the outgoing models." We looked up the current inflation rate and found that it is presently at historically-relative lows between 1.5% and 1.9% this past quarter. It does not seem that GM is increasing the cost of its trucks due to higher costs, but rather due to a shift in the trims and configurations it is choosing to produce. 

 

 “We are bullish on pickups and expect to gain sales momentum throughout the year,” said Kurt McNeil, U.S. vice president, Sales Operations. “We are installing capacity in Flint to build more HD pickups in total, more crew cab models, more dualies and diesel models, too, all in response to dealer and customer demand.” It looks like higher truck prices are here to stay, at least for the near term. 

[Sierra Dan]

Being bullish on pickups will just allow RAM to continue selling more 1500s and stay in the #2 spot.

And of course keep Ford at #1 as always! 

[mookdoc6]

1 hour ago, Sierra Dan said:

Being bullish on pickups will just allow RAM to continue selling more 1500s and stay in the #2 spot.

And of course keep Ford at #1 as always! 

Not so sure about that?  We will see by year end?  GM is now completing it's ramp for 1500's.  Lipstick on a PIG only goes so far......

Edited April 30, 2019 by mookdoc6

[dieselfan1]

What does being number one in sales really mean in the long run anyways?

Or number two or three for that matter?

I could really care less who sells the most trucks. It does not matter to me one bit. 

I've been running Chevy trucks since 1980. Most of them I bought brand new. ( I currently own two 2018 Silverados , number 15 and 16).

I highly doubt I'll ever own a Ford or Dodge. Just because they may sell more trucks sure don't make me want to run out and buy one. 

A lot of guys are getting all butthurt because Dodge just passed GM in truck sales. I'm not. I could care less. We alll know they are an inferior truck with reliability issues. And Ford,as far as I know,  they count all the trucks they sell F 150 thru F 650 as truck sales to inflate the numbers. GM only counts 1500, 2500, and 3500 pickups and 3500 chassis cabs. The new Silverado 4500 ,5500, 6500 may put a dent in the competitions truck sales but we will have to wait and see. I haven't even seen one in person on the road yet.

Bad news is trucks cost more than ever now and that's not going to change.

Edited April 30, 2019 by dieselfan1

[Colossus]

4 hours ago, Sierra Dan said:

Being bullish on pickups will just allow RAM to continue selling more 1500s and stay in the #2 spot.

And of course keep Ford at #1 as always! 

I hope they do.  GM needs a big big humbling lesson if they want to survive. 

[pickmeup]

GM wants to wein consumers off of the customary 10-13 k off msrp . They are bullish and confident their trucks are worthy of paying more . Big question is will consumers ''buy it''. How much more do consumers figure GM truck is worth imo.

[magnum74]

On 4/30/2019 at 3:01 PM, dieselfan1 said:

What does being number one in sales really mean in the long run anyways?

Or number two or three for that matter?

I could really care less who sells the most trucks. It does not matter to me one bit.

I completely agree with you but if customers are not finding their trucks appealing and moving in to brands offering a better bang for the buck it will cost start costing them. It's not so much sales numbers as it is danger of their product losing appeal.

[Likarok]

And I would like to let GM know that "My Money Will Continue To Stay In My Wallet!" 

[Chris walker]

Im not sure its wise to advertise that tactic. To me its basically stating their sales strategy is to offer a less competitive truck at higher prices because your loyal buyers will keep buying.

 

Am I missing something?

[O_J_Simpson]

On 4/30/2019 at 4:01 PM, dieselfan1 said:

 

 

A lot of guys are getting all butthurt because Dodge just passed GM in truck sales. I'm not. I could care less. We alll know they are an inferior truck with reliability issues.

Go back before 1994 Ram re-invention and Dodge...I mean Ram, had almost no truck market left. No one wanted their outdated stuff. Since then, they have come back to life and are dominating on a train that just keeps picking up speed, passing up GM in truck sales. Calling them inferior while getting your butt handed to you in sales is the definition of insanity.

[HondaHawkGT]

8 hours ago, O_J_Simpson said:

Go back before 1994 Ram re-invention and Dodge...I mean Ram, had almost no truck market left. No one wanted their outdated stuff. Since then, they have come back to life and are dominating on a train that just keeps picking up speed, passing up GM in truck sales. Calling them inferior while getting your butt handed to you in sales is the definition of insanity.

They haven't passed GM in sales, they only outsold the Silverado. Sierra+Silverado sales are way ahead of Ram.

[mawint]

The problem with GM's thinking is that they need to convince their buyers that the higher price in some form nets them a better truck. This could be because of features, reliability or both.

 

GM at the moment doesn't have a lineup that could convince me as a truck buyer that their vehicle is worth the extra money.

 

Reliability? All three manufactures have their issues and lemons but can I definitively say that I will get a longer lasting truck because I bought GM? Nope.

 

Features? The GM twins lack here. Interior wise I don't believe GM is on par with Ford or Ram. The 2019 interior doesn't differentiate itself far enough from the previous generation and doesn't add anything of value.

 

Mechanicals? Want a 6.2? Better get a top trim in order to even have the option. Want a two speed transfer case? Got to add the off road package. 

 

From my perspective GM seems to have locked one feature into specific trim levels or packages forcing people to combine packages for a higher value truck. In the event you can't get all of the packages you want, they are forcing their buyers to compromise.

 

41 minutes ago, HondaHawkGT said:

They haven't passed GM in sales, they only outsold the Silverado. Sierra+Silverado sales are way ahead of Ram.

I wouldn't say way ahead.

 

Ford F-Series	214611	214191	.2%
Ram Truck	120026	103964	15%
Chevrolet Silverado	114313	135545	-15.7%
GMC Sierra	40546	41468	-2.2%

Source 

 

Combined GM sold 154,859 to Rams 120,026, a difference of 34,833 with the GM vehicles trending down.

[HondaHawkGT]

3 minutes ago, mawint said:

The problem with GM's thinking is that they need to convince their buyers that the higher price in some form nets them a better truck. This could be because of features, reliability or both.

 

GM at the moment doesn't have a lineup that could convince me as a truck buyer that their vehicle is worth the extra money.

 

Reliability? All three manufactures have their issues and lemons but can I definitively say that I will get a longer lasting truck because I bought GM? Nope.

 

Features? The GM twins lack here. Interior wise I don't believe GM is on par with Ford or Ram. The 2019 interior doesn't differentiate itself far enough from the previous generation and doesn't add anything of value.

 

Mechanicals? Want a 6.2? Better get a top trim in order to even have the option. Want a two speed transfer case? Got to add the off road package. 

 

From my perspective GM seems to have locked one feature into specific trim levels or packages forcing people to combine packages for a higher value truck. In the event you can't get all of the packages you want, they are forcing their buyers to compromise.

 

I wouldn't say way ahead.

 

Ford F-Series	214611	214191	.2%
Ram Truck	120026	103964	15%
Chevrolet Silverado	114313	135545	-15.7%
GMC Sierra	40546	41468	-2.2%

Source 

 

Combined GM sold 154,859 to Rams 120,026, a difference of 34,833 with the GM vehicles trending down.

 

That's the smallest gap Ram could manage despite offering 30+% more in incentives in Q1. Every year for the last 5 years, Ram has fallen short of GM by hundreds of thousands of trucks. GM can act like they don't plant on adjusting prices but they will when investors start screaming about falling sales.

[econometrics]

On 4/30/2019 at 5:27 PM, pickmeup said:

GM wants to wein consumers off of the customary 10-13 k off msrp . They are bullish and confident their trucks are worthy of paying more . Big question is will consumers ''buy it''. How much more do consumers figure GM truck is worth imo.

This kind of hits the mark. I paid $43K for my $54K MSRP RST. I feel there were some key features left out on my truck, which are standard on a similar trim with Ford and RAM. However, I was fine with that because I got $11K off. 

 

Had I paid closer to $50K for the truck, I would really be regretting it now. 

 

So if GM wants to wean customers from the $10-$14K off MSRP, they should build a truck worth paying closer to MSRP. Pretty simple. 

 

[Grumpy Bear]

I'm pretty sure I'm just done. Price increases since I bought my 2015 are...….can't find the right words. Lock me out of my PCM, BCM and TCM? I bough it. I own it. End of story. Got rid of everything I have an interest in buying. RCSB. Full sized FAMILY cars. Eliminating what I want to PUSH me toward higher margins only pushed me to used. The idea that if one thing is all I have to choose from will get me to buy that one thing? Think again. I still have two feet and like walking. Cheaper and  more healthful too. Strong arm me? Get a grip!