Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

General Motors Company (GM): Will Big Sales Mean Big Profits?

In a month where many big-name automakers posted just so-so sales results, General Motors Company (NYSE:GM) did quite well for itself: General Motors Company (NYSE:GM)’s U.S. sales were up 7% in February, a good gain over a rough year-ago showing.

That compares well with the overall market’s likely increase, which analysts expect to come in at just under 4% once all the numbers are tallied. And it’s solidly ahead of the roughly 5% gain analysts expected for General Motors Company (NYSE:GM) on the month.

So what went well for the General? Quite a few things, it turns out — though there were a couple of red flags as well.

General Motors Company (NYSE:GM)Will big truck sales lead to big profits?
For General Motors Company (NYSE:GM) shareholders, the most striking number has to be the increase in the General’s full-sized pickup sales. GM’s pickup sales were up 28% over year-ago totals, well ahead of the 15% gain posted by rival Ford Motor Company (NYSE:F) , as an uptick in new-home construction drove increased demand.

That’s significant. Pickups are among GM’s most profitable products, a key driver of profits in GM’s all-important North American region. That’s why investors have been watching GM’s truck inventories carefully in recent months. The company’s inventories swelled to worrisome levels late last year, as GM moved to stockpile pickups ahead of a planned refitting of its truck factories — leading to concerns that deep discounts would be required to clear out excess trucks.

GM has tried to assuage those concerns, pointing out (reasonably) that its truck factories will be offline for several weeks while they are fitted with new tooling to produce GM’s redesigned next-generation pickups, due at dealers in late spring. But its inventories continued to swell — to 117 selling days’ worth as of the end of January.

Things are finally looking up on that front: GM reported on Friday that its pickup inventories had fallen to 97 days’ worth as of the end of February. That’s comfortably closer to the 90 days’ worth considered optimal by most industry-watchers, and it comes thanks to those strong February sales.

But those sales may have come at a cost. While Ford’s spending on incentives was likely down in February, according to estimates from analyst Jesse Toprak at, GM’s may have been up a bit over year-ago levels. That could have been a driver of pickup sales – but it could also end up cutting into GM’s first-quarter profits.