GM Pickup Inventory Reaches Critical State

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Bloomberg News - December 5, 2012

GM is fac­ing the prospect of hav­ing to cut pickup pro­duc­tion or increase dis­counts, a crit­i­cal fac­tor in GM prof­its, as dealer lot inven­to­ries mount.

Get details on the num­bers and what they mean.

Clear­ing away that inven­tory is crit­i­cal. At stake is the roll­out of new ver­sions of the Chevro­let Sil­ver­ado and GMC Sier­ras, sched­uled for release next year, and which are key to the company’s suc­cess in 2013. GM’s big pick­ups, which made up 23 per­cent of the automaker’s U.S. sales last year, are among their most prof­itable models.

“If they con­tinue to have these high inven­to­ries and then bring out the new prod­uct, that’s going to hurt the launch” of the new trucks, said Alan Baum, prin­ci­pal of auto-industry researcher Baum & Asso­ciates in West Bloom­field, Michi­gan. “It is more impor­tant to them that the new vehi­cles launch well.”

Adjust­ing pro­duc­tion would be “first and fore­most” in deal­ing with high inven­tory lev­els, Kurt McNeil, GM vice pres­i­dent of sales oper­a­tions, told ana­lysts and reporters on a con­fer­ence call Dec. 3. U.S. sales of the Chevro­let Sil­ver­ado decreased 10 per­cent to 30,674 last month com­pared with a year ear­lier while GMC Sierra deliv­er­ies slipped 2 per­cent to 11,726.

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