GM: Fewer rental shipments lead to 1.6% drop
DETROIT -- General Motors’ June sales slipped 1.6 percent amid a continued reduction in shipments to daily rental operators.
GM said today it sold 255,210 light vehicles last month, which included 5,690 fewer rental units vs. a year earlier. Had rental deliveries been equal to last year, GM’s overall sales would have been flat.
GM’s sales have dropped in four out of six months this year.
Retail sales, or sales to individual buyers, rose 1.2 percent in June. The company estimates it gained 0.2 percent of retail market share, to 17.1 percent, after May snapped a 12-month streak of retail share gains.
In the first six months of the year, GM’s overall sales fell 4.4 percent, a drop the company attributes to the pullback in rental volume. It cut rental sales by 37 percent, or 88,499 vehicles, vs. the first half of 2015. Keeping rental sales equal to a year earlier would have resulted in a 1.5 percent increase.
GM executives say they’re reducing rental sales to improve residual values and brand health. Another factor: the Chevrolet Cruze and Malibu -- two of GM’s highest volume cars -- are freshly redesigned, so GM is prioritizing sales to retail customers.
Kurt McNeil, GM’s vice president of sales operations, told reporters this week that GM’s rental cutbacks will ease in the second half of the year.
McNeil defended GM’s strategy of emphasizing retail sales at the expense of overall market share. He added that GM’s relatively low inventory levels -- 67 days’ worth as of June 1 -- and restrained incentive spending are signs that it’s running the business with profit and brand health in mind.
In years past, GM’s strategy was to “stack them deep and try to sell them cheap,” McNeil said.
GM said its average transaction prices in June rose 5 percent, to about $35,400. It said incentives as a percentage of ATPs was 10.1 percent, below the industry’s 10.6 percent, citing data from J.D. Power.
Trucks sales led the way in June. GM said its overall truck deliveries -- pickups, SUVs and vans -- rose 3.4 percent. Car volume fell 1.3 percent while crossover sales dropped 9.3 percent, the company said.
Amid a Chevrolet Silverado advertising campaign that raised questions about the durability of the aluminum bed of Ford’s F-150, Silverado sales slipped 3.7 percent.
Chevy spokesman Jim Cain said in an email that the campaign had “a strong positive impact on our results,” citing a gain of 1.7 percentage points of retail market share in the full-size pickup segment, to 28.2 percent. Ford’s F series’ retail share slipped 0.4 percentage points, to 35.2 percent, GM said, citing J.D. Power figures.
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