DETROIT -- General Motors may trim third-quarter truck production to offset increasing levels of inventory, particularly with the 2007 full-sized SUVs.
GM pumped its redesigned full-sized SUVs into the market earlier this year to ignite corporate revenue.
As a result, GM insiders say the company is weighing its third-quarter production of those trucks, which include the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade.
The full-sized SUV segment overall has shrunk this year in the United States, partly as a result of increasing fuel prices and higher interest rates. Sales of large and luxury SUVs for the entire industry are down 20.6 percent through July compared with the year-ago period, according to the Automotive News Data Center. Sales of GM's full-sized SUVs are down 16.0 percent through July.
In speaking about GM's current full-sized SUV inventory, one GM executive said, "It's not where we'd like it to be. We'll be taking a close look at third-quarter production." The executive asked not to be named.
The full-sized SUVs, which debuted early this year, are built on the GMT900 architecture. GM will launch its full-sized pickups on GMT900 this fall.
Through July, GM has built an estimated 324,000 GMT900 trucks at its plants in Arlington, Texas; Janesville, Wis.; and Silao, Mexico. GM has sold 231,305 GMT900s through July.
GM's third-quarter total production forecast remains unchanged at 1.05 million vehicles, 645,000 of which will be trucks, said Paul Ballew, GM's executive director of global market and industry analysis, in a conference call.
Ballew said GM currently has about 100,000 large SUVs in stock in the United States. Overall truck inventory is 660,000. GM will be monitoring inventory closely.
He added that GM will look closely at third-quarter production and manage it.
GM plans to hold to its marketing strategy of higher transaction prices and lower incentives. Another GM executive insisted the company will not run a big financing program or lean on daily-rental fleet to clear out excess inventory but will do so through production cuts.
Most likely, GM will eliminate overtime and go to straight shifts for August, September and October at key plants, the insider said. That would allow GM to avoid a couple of down weeks and get inventory back in line.
The number of days that new Tahoes sit on dealership lots is rising, according to the Power Information Network.
In January, a new Tahoe spent an average of seven days on a dealership lot and had an average transaction price of $42,191.
In July, that same Tahoe sat an average of 62 days on a dealership lot and sold at an average transaction price of $37,667.
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