Oh GM. You poor, stupid company you. According to Reuters this week, Chevrolet Silverado pickups sit on the dealership lot an average of 122 day each. Seriously? That's just horrible business. Of course, GM is citing the price of gas as a culprit, but many industry analysts blame GM directly for this problem.
Apparently, they've been a bit too optimistic about the economic recovery and assumed everyone would drop by and buy America's oldest full-size pickup design, rather than spend their money on the recently redesigned Ram or Ford F-150. As usual, GM's solution to this problem is to throw away profitability by giving customers nearly $5,000 in rebates to move this herd of dinosaurs.
When will GM realize that deep discounts don't help the brand image, and don't solve the real problem of poor management and bad business decisions? Have you ever noticed how some car companies, such as Toyota and Honda, rarely discount their cars more than $500 unless the new body styles roll out? This is because these companies carefully manages vehicle production to remain just slightly above demand, so that the average car is sold in a matter of weeks, not months.
When I worked at the dealership, we had one Pathfinder, a holdover old-design in bright blue with every single option. A tough sell, indeed. Do you know who sold it? Me, baby. Because my managers stacked bonus money on me to move that heap of metal, as well as putting it into delaer demo service to put some miles on it to reasonably lessen the value. Nissan gave the incentives to the dealership to move the old stock and keep things rotating, rather than the customer. Of course, it allowed us to accept less for "Barney" as we called it, but it didn't hurt the resale value of all Pathfinders nationwide, the way that huge factory incentives on
entire lines of cars will.
Ultimately, GM seems to have learned nothing from their bankruptcy/bailout, and have resumed business as usual, overproducing and creating incentives to move the metal rather than allowing demand to drive sales. And as profitability per vehicle drops, the bean-counters will find ways to produce the vehicles for less money (such as lower quality materials and more "traditional" technology), and the cycle begins all over again.
Of course, the average American consumer will encourage GM, snapping up any car offered on a deep discount without any regard for long-term market effects. Shame on you, GM, and shame on us for not seeing it coming.
You make me want to buy a sexy redesigned pick up truck. On a related note, would you ever own a truck and what truck would you own?
ReplyDeleteIf I was going to buy a truck, I'd buy an old mid-size, something like a Toyota Tacoma is preferable, but for truck stuff, a beat up old Ford Ranger or Chevy S-10 would be just as good. I would never want a truck for my primary vehicle, so as long as it is old, beat up, and cheap, I wouldn't care what it was.
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