The ongoing slump in the demand for passenger vehicles weighed on the performance of General Motors (GM) in the first quarter. Vehicle deliveries declined year-over-year in the US as buyers continued to dump conventional cars in favor of SUVs and trucks.
Total deliveries dropped 7% annually to 665,840 units in the first quarter when some of the company’s popular brands witnessed a decline in sales. Buick and Cadillac were down 8.7% and 2% respectively, while deliveries of Chevrolet slipped 7.8%. There was a 4.4% fall in the sales of GMC. In the fourth quarter, total sales had fallen by 2.7%.
SUVs and trucks accounted for more than 80% of the total deliveries. The unique selling mix, on which GM has been focusing a lot in recent months, helped it realize strong average transaction prices which were the highest ever for the March quarter. Sales of the bigger vehicles, mostly comprising the popular Chevrolet and GMC models, were also the highest for the reported quarter.
The unique selling mix helped GM realize strong average transaction prices which were the highest ever for the March quarter
During the three-month period, per-unit incentive spending is estimated to have dropped by $175 year-over-year. However, the management is optimistic about the future performance and bets on the uptick in consumer sentiment seen towards the end of the quarter, reflecting the improvement in personal finances.
Meanwhile, the number of commercial vehicles delivered in the first quarter was broadly unchanged from the year-ago period.
GM is planning to start the next phase of the launch of full-size pickup trucks in the second half, anticipating the positive trend to continue for the rest of the year and beyond. The increasing demand from both dealers and buyers has prompted the company to increase capacity at the truck and SUV production facilities. The auto sector, in general, is expected to benefit from the positive economic momentum, the Fed’s hawkish monetary policy, and strong labor market.
Meanwhile, the market reacted quickly to the unimpressive sales performance, sending the company’s shares down by 1% in early trading Tuesday. The stock, which gained about 12% since the beginning of the year, is trading broadly at the levels seen a year earlier.