DETROIT — Sales of new vehicles in the United States are expected to rise in February, but General Motors’ decision to cut production of large pickup trucks at a US plant points to new challenges for Detroit’s automakers.
The major Detroit pickup truck brands are sitting on a growing list of unsold vehicles, according to Cox Automotive data provided to Reuters.
As supply-chain bottlenecks ease, the resolve among Detroit automakers to keep inventory tighter than before the pandemic will be tested. Dealers said automakers may have to choose between reducing production to avoid a price cut or offering more discounts to boost sales volumes.
GM dealers have more than 100 days’ supply of Chevy Silverado pickups in stock, according to Cox, reflecting more vehicles on the ground and a seasonal slowing of sales. Inventory levels for rival Stellantis NV’s Ram half-ton and heavy-duty pickups exceed 100 days’ supply. Ford Motor Co has 92 days’ worth of F-150s in stock, according to Cox data.
A GM spokesman said that Cox’s numbers do not accurately reflect GM’s inventory position. GM does not disclose detailed inventory figures. However, he added that GM is working to support its pricing strategy, which relies on keeping inventory lower than in the past.
Stellantis said in a statement that it does not plan downtime at any of its North American plants, but continually reviews its inventory levels and will make production adjustments as necessary.
Industry consultants JD Power and LMC Automotive predicted Friday that the U.S. car And light truck sales will reach a 14.6 million-vehicle annual pace for February. That’s up from a year ago, but still well below pre-pandemic levels.
Power and LMC said the February sales growth was due to a 54% increase in sales to fleet customers.
The total inventory of unsold vehicles is still low, but “still not enough to meet demand each month,” Thomas King, president of the data and analytics division at JD Power, said in a statement.
GM said the decision to idle the Fort Wayne, Indiana, assembly plant that builds the Chevrolet Silverado and GMC Sierra pickup trucks for two weeks beginning March 27 was to maintain “optimal inventory levels with our dealerships.” it was done.
Who blinks first?
GM, Ford and Stellantis dominate the US large pickup market, and have been raising the prices of their trucks to record levels for the past two years as supply-chain limited production.
Dealers contacted by Reuters said that now, some customers are waiting for better deals, or postponing purchases because a combination of higher prices and higher interest rates has put the vehicles out of reach. Automakers face a choice between cutting prices using deep discounts or subsidized loans, or keeping inventories tight.
“What they’re doing is playing what I call the blink game – whoever blinks first. Especially for trucks,” said Ohio dealer Rhett Reed.cart, whose ricart Automotive Group sells Ford and GM trucks at individual stores.
Brad Sowers, president of Jim Butler Auto Group in Missouri, said the higher prices are hurting demand. However, he wrote in an email, “Manufacturers do not want to flood the market and drive demand by being forced to spend quadruple stimulus spending that will erode their margins.”
Some discounts are visible in the large pickup segment. Ram is offering 2.9% financing for up to 72 months on some Ram 1500 trucks.
Power and LMC said fewer vehicles were sold in February than their manufacturer’s suggested prices, and average rebates rose 4.7% to $1,335 per vehicle. Power-LMC said it is still well below pre-pandemic levels.