Monday, April 11, 2005

 

GM Speaks Out, Says Little

Well, GM's getting mouthy lately, which could be some new-found attitude or just a lot of hot air intended to prop up their position for the folks on Wall Street.

First, they're under the perception that SUV sales aren't sinking because of gas prices:

During a conference call with auto analysts and journalists April 1, Ballew criticized them for also linking rising gasoline prices to falling SUV sales.

"That's poor analysis and poor journalism," Ballew snapped.

As he has repeatedly in recent months, Ballew insisted that sales of big SUVs, such as the Chevrolet Suburban, are sliding because GM's vehicles are nearing the end of their life cycle.

Ford's SUV sales are off, Ballew said, because shoppers aren't impressed with Ford's offerings, which received minor styling changes several years ago. Together, GM and Ford control about 60 percent of the SUV market.

Furthermore, Ballew and some analysts say that many SUV owners are trading in their rigs for full-size pickups, which drink just as much gasoline as big SUVs.

GM sold more pickups in March than in any month since 1978, Ballew said. Some analysts say the big four-door pickup has replaced the SUV as the "cool" vehicle to own.

Ford's SUVs have received more than "minor changes" over the past "several years"; the Escape just received a refresh, and the Explorer and Expedition have both received major revamps in the past three years. Nope, I don't think that's the reason for Ford's sinking SUV sales.

I also find it interesting that Ballew points out the popularity of four-door pickups. A large number of those are sold as "heavy-duty light trucks", i.e. 3/4- or 1-tons, and a significant number of those are sold with fuel-efficient - and highly profitable - diesel engines (the "take" rate on diesels varies from 30% on GMs to 70% on Dodges according to the numbers I saw a couple of years ago). Those same engines aren't available in most SUVs (the Ford Excursion being the exception), despite the fact that GM offers the Suburban as a 3/4-ton. Offer the diesel, and I bet that GM's SUV sales will improve. And why are all those diesel pickups being sold right now? Fuel economy is a huge factor in that decision.

Next, Lutz took on some questions from a Morgan Stanley analyist; what's interesting is not necessarily his responses (the questions centered around the important of options and features and could have probably been answered "correctly" by any junior high student who reads auto mags in study hall), but rather an interesting bit of sales statistical data:

The Prius outsold, in no particular order, the big Chevy Suburban sport utility vehicle, the Ford Expedition large SUV, and Toyota's own big Sequoia SUV, whose sales fell 12.5% last month. All those vehicles easily outsold the Prius a year ago. Domestic large SUVs, as a group, were stacked up on dealer lots at the end of March, with 120 days' supply, according to Autodata Corp.

The Prius also outsold other hybrid cars, but lower-volume rivals did well relative to their previous sales. Honda says it sold 2,896 of its hybrid Honda Civics, the third-best month ever for that model, while consumers bought 1,862 hybrid Honda Accords -- the best month yet for that model. Ford said its hybrid SUV, the Ford Escape, had its best month yet with sales of 1,569 vehicles.

Taken together, sales of these hybrid vehicles totaled 16,563 vehicles in March -- more than Ford's Lincoln brand or Nissan's Infiniti brand.

Holy crap. That really puts things in perspective, eh? Imagine what a division full of hybrids models could accomplish in the marketplace right now. Toyota obviously imagined that some years ago, judging by the rate at which they're introducing new product (and given typical development times, they rolled the dice and kicked off these new hybrids well before the Prius became a success).

Also note that Toyota's Sequoia isn't performing well in the marketplace. GM's probably got a dumb-sounding excuse for that as well.

Anyways, the point of all this? I think that the louder GM gets, the more clueless they sound. For their sake, they'd better hope I'm wrong and they're right, or else dropping everything to launch the GMT-900s is going to look quite foolish in another year or two.

EDIT -

I forgot to comment on this statement by Lutz during the Morgan Stanley telecon:

Q: Diesel?

A: Almost sine qua non in Europe and almost irrelevant in the United States for passenger cars.

I personally disagree - I think a lot of those diesel truck owners would also like a diesel Cobalt, Five Fusion, or 300C parked in the driveway.

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