It doesn’t always look like it, but General Motors Company (NYSE:GM) is making progress in its long haul back from bankruptcy. GM said on Tuesday that its U.S. sales were up 6% in June, with all four of its brands posting retail sales gains. That beat analysts’ estimates, which called for an average 2.1% gain, according to Bloomberg.
Six percent may not sound like a big gain, and it’s likely to have trailed the U.S. market’s overall growth for the month. (We’ll know for sure in a day or so.) But the numbers behind the headline tell a story that suggests that General Motors Company (NYSE:GM) is finally on the right track in its home market.
Strong retail sales should drive profit gains GM pointed out that its retail sales actually grew 14% in June, likely outpacing the overall market. Executives noted that General Motors Company (NYSE:GM)’s fleet sales were down because of the timing of deliveries of certain large orders — they happened to have hit earlier this year than in past years.
Generally, analysts tend to like it when an automaker’s fleet sales are down relative to retail sales, as, generally speaking, retail sales are more profitable. But that’s not the whole story: Rival Ford Motor Company (NYSE:F) gets as much as a third of its U.S. sales from “fleet” business — more than General Motors Company (NYSE:GM) — but its overall profit margins in North America are among the best in the business. What sometimes goes unnoticed is that a lot of Ford’s fleet sales are to commercial customers, who are buying high-profit trucks and vans.
Many pickups are bought by businesses like building contractors, who may buy 10 or 20 or more at a time. That’s good business to have, better than the low-margin rental car sales that many associate with “fleet” numbers. General Motors Company (NYSE:GM) likely has been losing some of that business to Ford Motor Company (NYSE:F), because Ford’s F-Series pickups have been more competitive (and more fuel efficient) than GM’s outgoing models.
But that could change as General Motors Company (NYSE:GM) rolls out its all-new 2014 pickups. Some of those have already reached dealers, and GM U.S. sales chief Kurt McNeil said on Tuesday that they are “turning” very quickly – spending just 10 days on dealer lots, on average. Overall, sales of GM’s Chevy Silverado (both old and new versions) were up a very impressive 29% in June.
General Motors Company (NYSE:GM) is currently selling a mix of old (2013) and new (2014) pickups, a situation that is likely to continue for several months as GM ramps up production and begins a big marketing push for its all-new trucks. The new trucks will be much more profitable than the outgoing ones. But profits on the 2013s may be better than expected: It’s customary to boost discounts on outgoing models, but because of strong industrywide demand, GM hasn’t had to do that with its remaining 2013 trucks.
New products driving nice gains, and likely increased profits There were other signs of progress for General Motors Company (NYSE:GM) in June. Like Ford Motor Company (NYSE:F), GM’s much-improved small cars saw strong sales as consumers continued to seek out high-quality, fuel-efficient options. The compact Chevy Cruze had its best sales month ever, GM said, and both the subcompact Chevy Sonic and the Chevy Volt hybrid posted strong results.