General Motors cut incentives in November that resulted into lower sales. Now the company is forced to offer heavier discounts to attract customers and shed inventory
General Motors Company (NYSE:GM) is offering hefty discounts on its Chevrolet Silverado and Sierra pickup truck models that are continually piling up at dealers across the country. General Motors Company (NYSE:GM) is offering discounts of up to $9,000 on the remaining 2012 models and also about $4,500 in discounts for 2013 models. With generous deals, abundant financing and low interest rates, it seems now is an optimal time for people to purchase a new truck.
This past November, Chrysler Ram was offering the largest incentives, of $4800 on average, only closely followed by General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) at $3700 according to J.D. Power and Associates. General Motors had previously lowered discounts on their Chevrolet Silverado model to approximately $3,700. However this month the company has boosted its discounted offers. That being said, Ford Motor Co. (NYSE:F) and Chrysler have either held relatively steady or have slightly increased their incentives on certain models.
Throughout the year the three Detroit automakers have been offering generous incentives to attract customers, as the market continues to recover from the Great Recession. However, General Motors Co. (NYSE:GM) cut discounts on Chevrolet Silverado and Sierra pickups in November and as a result, sales of Chevy Silverado declined 10 percent while Sierra sales fell about 3 percent overall. Meanwhile, Chrysler Ram sales jumped up 23 percent and Ford F-series truck sales leaped 18 percent in total.
By the end of November, GM dealers across the nation had over 169,000 Chevrolet Silverados in their lots. That would take 138 days to completely sell at the current rate. GM executives defended their approach this November by saying that they kept incentives low because they wanted people to buy cars and trucks based on the merits of the vehicles and not because they were simply cheap. Unfortunately General Motors trucks haven’t been updated since 2007, so they lost market share to more advanced and newer trucks from Ford and Chrysler. As an example, Ford updated the engines of its F-series four times last year. So in turn, General Motors Co. (NYSE:GM) was essentially forced to offer heavier discounts this month.
The chief of Chevrolet sales said that General Motors Company (NYSE:GM) will remain competitive with incentive offers in the foreseeable future, but he denied getting into “liquidation mode” to sell more trucks.