GM's pickup plans divide dealerships
With changeover nearing, some buy big, others pass
DETROIT -- Texas dealer Rox Covert has roughly four months' worth of full-sized pickups in stock at his two Chevrolet and two GMC stores. Normally he prefers a three-month supply.
That extra slug of Chevy Silverados and GMC Sierras is reality for many General Motors dealers lately.
Last year GM began building surplus pickups to get through this year. Its three truck plants will be idled for a combined 29 weeks as GM retools the factories for its next generation of pickups and SUVs, scheduled to arrive next year.
That has left many dealers in a quandary. Some are turning away trucks for fear of being stuck with too many. Others are bulking up now, worried that their lots will run thin while GM's plants sit idle.
Even as Chevy dealers sell more cars than ever thanks to a revitalized lineup, pickups and SUVs remain the lifeblood for many. Some dealers say growing supplies of the aging full-sized pickups call for heftier incentives.
"We've got the oldest truck in the game," Covert says. "I think we could use something stronger."
The Silverado and Sierra were launched in late 2006. The current Ford F-150 arrived two years later. Chrysler Group is rolling out a re-engineered Dodge Ram in the fall.
But boosting incentives would further pinch GM's profits, which will be squeezed in the second and third quarters because of the reduced production.
GM has a $3,000 cash incentive on crew-cab versions of the Silverado 1500, according to AIS Rebates, an Ann Arbor, Mich., firm that provides incentive data to dealers.
Some dealers are reticent to see their pickup stocks grow. One dealer who didn't want his name published said he recently turned down his allocation of more than 20 Silverados.
Martin NeSmith, who owns two Chevrolet-Buick-GMC stores in Georgia, is taking the opposite tack. In March he requested an extra 25 pickups to add to the roughly 100 he had in stock, which he says is his typical supply for spring.
"We've asked them for some extra trucks, realizing they're going into that changeover," he says.
During the first four months of the year, GM has maintained an average pickup supply of 120 days, about one-third higher than the 90-day supply that analysts consider healthy for pickups.
Early on, GM executives alerted analysts about the plan to front-load production, in an effort to head off speculation that GM was reverting to the bad habit of overproducing and later having to put cash on the hood to clear lots. Dealers also have been kept in the loop, executives say.
"Dealers get it. They're pretty comfortable with their inventory now," Don Johnson, GM's vice president of U.S. sales, said last week. "We talk to them about our forecast for the year so that they can plan."
GM's pickup plants in Flint, Mich., and Fort Wayne, Ind., and its SUV plant in Arlington, Texas, will be idled on a rolling basis throughout the year, with the bulk of the downtime scheduled for the second and third quarters. Work at Arlington will start later than the other two because the launch of the next generation of SUVs will come later than those of the pickups, which are expected to hit showrooms by spring 2013.
The Fort Wayne pickup plant, for example, was down for the last two weeks for retooling. It resumes production this week. The Flint plant will be idle the last two weeks of June and again in late September, union officials say.
"You'd like to get a bunch the day before they shut the plant down," says Lynn Thompson, a Springfield, Mo., Buick-GMC dealer. "But it doesn't work that way."
You can reach Mike Colias at email@example.com.