DETROIT – New cars were key for General Motors in the first quarter. New trucks will be the key to the rest of this year.
Two new Opels – the Mokka subcompact SUV and Adam small car – helped GM stanch its first-quarter losses in Europe, while the Cadillac XTS and Chevrolet Malibu sedans took China by storm. GMs worldwide sales rose almost 4 percent in the first three months.
Now, GMs fortunes rest on the redesigned Chevrolet Silverado and GMC Sierra full-size pickups. The trucks, which were last updated in 2007, go on sale in a few weeks. The Allen County assembly plant is one of the facilities that produce the Silverado and Sierra. GM hopes to cut into Fords lead in the pickup segment, which is red hot due to a recovery in the housing and construction markets.
Theyre long overdue, said Bill Visnic, a senior editor and analyst with the Edmunds.com auto shopping site. They really need these trucks to get out there and defend their share.
GM said Thursday that its net income fell 14 percent to $865 million, partly because it slowed shipments of the old pickup models so factories could prepare to make the new ones. GM also spent more on incentives to try to clear old pickups off dealer lots.
The Silverado and Sierra remain huge sellers, even though the Dodge Ram and Ford F-Series have been retooled more recently. One of every 12 vehicles GM sold worldwide last year was a full-size pickup, and the Silverado is the second best-selling vehicle in the U.S. behind the F-Series. The big profits from GMs trucks – estimated at up to $10,000 a vehicle – can be plowed into other products around the globe.
Kurt McNeil, GMs U.S. sales chief, said he expects GMs North American profits to rise in the second half of the year, when it will be able to command higher prices for the new Silverado. The trucks are hitting the market at the perfect time. Rising home construction helped full-size truck sales increase 27 percent through April in the U.S., or nearly four times faster than the industry as a whole.
GMs earnings fell to 58 cents a share from 60 cents a share in the January-March period a year ago. Excluding one-time items, including currency devaluation, GM earned 67 cents a share, topping analysts forecast for 54 cents, according to FactSet. Revenue also topped Wall Streets expectations.
Shareholders cheered the news. GMs shares rose 3.2 percent to close at $31.16. At one point Thursday, they hit $31.81, their highest level since July 2011. The shares are up 8 percent since the beginning of this year.