The full-sized pickup wars have continued to spawn big incentives ahead of a supply increase of Ford Motor Co.’s (NYSE: F) new F-150. Among the most aggressive offers is an $8,500 discount on General Motors Co.’s (NYSE: GM) Chevy Silverado, which runs second to the Ford pickup in unit sales.
April sales of the F-Series were 62,627, slightly down from the same month last year. Ford executives expect sales to surge when supply of its new aluminum-body version match demand. That remains to be seen. April sales of the Silverado were up 7.5% to 45,987. Lagging both, sales of Fiat Chrysler Automobiles N.V.’s (NYSE: FCAU) Dodge Ram were only 37,921.
The sharp price cut of the Chevy Silverado ahead of Ford’s increases in F-150 supply may be a means for Chevy management to hold market share at current levels.
The incentive for buyers of the 2015 Silverado 1500 Crew Cab LT All Star 4WD fall into three parts. One is a $4,750 “total allowance.” However, the discount is not total because there is a second incentive, which is a $3,000 “factory reduction below MSRP.” Finally, Chevy offers a $750 “option package discount.” Chevy offers more modest incentive on some of the balance of the Silverado line.
Not to be entirely trumped, some versions of the Ram pickup carry aggressive incentives as well.
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The chess game among the three large-sized pickup manufacturers will become more complicated when supplies of the new F-150 increase. If sales are less than modest, Ford will have to consider sharp discounts as its two competitors have. That may well be necessary if it wants to keep its large sales lead against Ram and Silverado. On the other hand, a Ford success may drive its two competitors to drop prices even more.
Ford management claims supply of the new F-150 will be high enough by summer to make a fair judgment of demand. That will determine which of the three pickup manufacturers have to shave margins.
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