DETROIT — New vehicle sales in the United States are expected to pick up in February, but General Motors’ decision to cut production of large pickup trucks at a US plant points to new challenges for automakers in Detroit.
According to Cox Automotive data provided to Reuters, major Detroit pickup brands are facing growing inventories of unsold vehicles.
As supply chain bottlenecks ease, Detroit automakers’ determination to keep inventories tighter than before the pandemic will be tested. Automakers could have to choose between cutting production to avoid price cuts or offering deeper discounts to boost sales volumes, dealers said.
GM dealers have more than 100 days of stock of Chevy Silverado pickups in stock, according to Cox, indicating more vehicles on the ground and a seasonally slow sales rate. Stock levels are over 100 days of supply for Ram half-ton and heavy-duty pickups from rival Stellantis NV. Ford Motor Co has 92 days worth of F-150s in stock, according to Cox data.
A GM spokesperson said Cox’s numbers are not an accurate representation of GM’s inventory situation. GM does not disclose detailed inventory figures. However, he said GM is acting to support its pricing strategy, which relies on keeping inventories smaller than in the past.
Stellantis said in a statement that it had no downtime planned at any of its North American plants, but was continually reviewing its inventory levels and would adjust production if necessary.
Industry advisers JD Power and LMC Automotive predict Friday that US car and light truck sales for February would hit a pace of 14.6 million vehicles year over year. That’s more than a year ago, but still well below pre-pandemic levels.
February sales growth was led by a 54% increase in sales to fleet customers, according to Power and LMC.
Total inventories of unsold vehicles are still low, but “are still not enough to meet demand each month,” Thomas King, president of the data and analytics division at JD Power, said in a statement.
GM said the decision to shut down the Fort Wayne, Indiana, assembly plant that builds Chevrolet Silverado and GMC Sierra pickup trucks for two weeks starting March 27 is in order to maintain “optimal inventory levels at our dealerships.”
Who blinks first?
GM, Ford and Stellantis dominate the U.S. full-size pickup market and have pushed their truck prices to record levels over the past two years as supply chains constrained production.
Dealers contacted by Reuters said some customers are now waiting for better deals or putting off buying because the combination of high prices and higher interest rates is making vehicles unattainable. The automakers are faced with a choice between lowering prices through bigger rebates or subsidized loans, or keeping inventories tight.
“What they do is play what I call the blink game — who blinks first. Especially for trucks,” said Ohio dealer Rhett Ricart, whose Ricart Automotive Group sells Ford and GM trucks in different stores.
Brad Sowers, president of Jim Butler Auto Group in Missouri, said high prices hit demand. However, he wrote in an email, “Manufacturers don’t want to flood the market and be forced to quadruple stimulus spending to boost demand that will squeeze their margins.”
Some discounts appear in the large takeaway segment. Ram offers 2.9% financing for 72-month loans on select Ram 1500 trucks.
Power and LMC said fewer vehicles were sold above their manufacturer’s suggested prices in February, and the average discount increased 4.7% to $1,335 per vehicle. That’s still well below pre-pandemic levels, Power-LMC said.
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