Cars and Drivers
GM Launches $8,250 Promo Savings on Silverado Pickups
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General Motors Co. (NYSE: GM) had a rotten sales month in May. Volume tumbled 18% on all its vehicles and by nearly 13% on its top-selling Silverado full-size pickups. The company is making buyers an offer it hopes they can’t refuse for June.
On a 2016 Silverado 1500 crew cab LT All Star with four-wheel drive, GM is offering up to $8,250 in cash off the purchase price: a cash allowance of $2,000, a bonus tag cash allowance of $2,500, a $3,000 factory reduction below the manufacturer’s suggested retail price (MSRP) and a $750 option package discount. On top of that, a qualified buyer can get 0% financing for 60 months.
According to Kelley Blue Book, the MSRP on a four-wheel drive All Star LT with a V6 flex-fuel engine is $44,590. The dealer invoice on that truck is $41,521. The promo price offers a discount of 18.5% from the MSRP. Not a bad deal.
Two things are likely at play here. First, Silverado trails the F-Series from Ford Motor Co. (NYSE: F) by about 100,000 unit sales through the first five months of 2016. Silverado sales remain ahead of Fiat Chrysler Automobiles N.V.’s (NYSE: FCAU) Ram pickup sales by more than 30,000 units, but the gap has narrowed. In the first five months of 2015, Silverado outsold Ram by nearly 45,000 units. For the year to date, Ram sales are up 8% while Silverado sales are down 0.1%. GM doesn’t want to lose second place to Ram, no matter how remote the possibility seems.
Second, GM has some room to work. The company’s May promotional discounts on Silverado pickups equaled about 9.5% of the average sales price, lower than both Ford and Ram. GM can afford to raise the promo level on its trucks, and doing so after a poor sales month can rev up dealers and customers.
The stock traded down nearly 2% Friday morning, at $29.67 in a 52-week range of $24.62 to $36.88. The consensus price target on the stock is $38.24.
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