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.
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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.