Ford Motor Company (NYSE:F) has enjoyed years of success with the F-Series, which remain America’s best-selling vehicles. That status is something General Motors Company (NYSE:GM) aims to change with the 2014 Silverado. In an industry that sees vehicle makeovers every two to three years, the Silverado is considered a dinosaur — the last redesign was completed back in 2006. Yet there’s no doubt that the 2014 Chevy Silverado will mark the No. 1 most important vehicle launch since the automaker went bankrupt. Here’s what you need to know.
Just how important is the Silverado?
Now that it’s mostly done dealing with the aftereffects of its $50 billion U.S. taxpayer-funded bailout, General Motors Company (NYSE:GM) is spending capital to redesign its vehicle portfolio. It’s been estimated that General Motors Company (NYSE:GM) invested between $3 billion and $4 billion to develop these new trucks and engines. That’s a lot of money invested that won’t be evident from the trucks’ outside appearance, as the design remains very similar.
The money spent will, however, be evident from both an investing and consumer standpoint. General Motors Company (NYSE:GM) is updating the interior with plenty of technology innovations, as well as upgrading the gas mileage with its line of EcoTec engines. For investors in particular, money put into revamping the plants where the trucks are built will help improve operating efficiencies and profits per vehicle. It’s all part of the CEO’s plan to clone its rival’s “One Ford” strategy and raise operating margins in the U.S. to 10%.
Doing it right the first time
It’s incredibly important for management not to rush this launch and to do it right the first time. Chevy’s 2014 Silverado will have a year’s head start before the next-generation F-150 is released and can use a surging pickup segment to win back lost market share. Here’s what General Motors Company (NYSE:GM) Global product development chief Mary Barra had to say about the launch:
“I’m very confident that everything’s on track and moving forward. … It’s been the most rigorous process we’ve gone through to make sure we put a high-quality truck into the marketplace, day one. … [The launch is] going to be shortly.”
The current models are estimated to generate up to $12,000 of profit per vehicle, but with the Silverado’s old age, GM has to increase incentives to succeed against its competitors. Investors can expect margins and profits to improve with the new model.