The business of selling full-size pickup trucks is at a fork in the road. Manufacturers can churn them out faster than they can sell them with their more than capable factories and workforce, or limit production and maintain profitable sales margins. GM has decided to attempt the latter, pausing production at its Fort Wayne, Indiana assembly plant responsible for building both the Chevrolet Silverado and GMC Sierra 1500 pickup trucks. Analysts have opined that the move comes as an attempt to maintain overall pricing at heightened levels, as GM can avoid heavy discounts on its breadwinning vehicles. However, a rising inventory could also point to a drop in overall demand and could be a bellwether for sales and earnings reports to come.
At the moment, GM’s truck stockpile has reached a 100-day supply, according to a Reuters report using Cox Automotive data. GM has objected to the accuracy of these estimates, but wouldn’t reveal the accurate number.
The Detroit News reported starting March 27. The facilities building the Sierra 1500 and Silverado will take a two-week break. The pause, as described by GM itself is in an effort to control and maintain the best delivery levels they can keep. Reading between the lines however, they are stifling production output to introduce a bit of scarcity allowing prices to remain as high as they already are or surge even further out of reach.
The Detroit Three manufacturers – Ford, GM, and Stellantis – have dominated the large pickup truck market over the years, which is in part due to easy financing, rebates, cash back discounts, allowances, and heightened incentives overall. Avoiding these techniques could point to “real” market demand, or could be a tact employed for the three automakers to avoid paying excess CAFE related emissions penalties.
One dealer group owner in Ohio calls it a “blinking game,” teasing it’s all about who’s going to blink first. GM and others may soon have to dangle discounts over the hoods of their prized pickups, at the expense of their profit margins, in order to just make a sale.
Image copyright Manoli Katakis, Muscle Cars & Trucks
