The Chevy Silverado is the second best-selling vehicle in America. It cemented that position with sales of 40,716 in January, up 14.5% year over year. Nevertheless, in the ultra-competitive field of full-sized pickups, Chevy has discounted a model of the truck by over $9,000.
Chevy’s discount on the Silverado 1500 Crew Cab LT All Star 4WD model can be as high as $9,678. This includes a $6,000 cash allowance, $2,928 reduction below manufacturer’s suggested retail price (MSRP) and $750 option package discount. The package is only available to qualified buyers, presumably people with good credit, and financed through GM Financial. Alternatively, buyers can opt for 0% annual percentage rate (APR) financing for 72 months on all 2018 Silverado 1500 Crew Cab LT models.
Among the things that have to make General Motors Co. (NYSE: GM) management concerned about such heavy discounts is that the Silverado is well regarded and gets good reviews. However, the Silverado trails the top-selling vehicle in the United States for decades, Ford Motor Co.’s (NYSE: F) F-150, which had sales of 58,937 in January, up 1.7%. Following close behind the Silverado is the Ram pickup, which Fiat Chrysler Automobiles N.V. (NYSE: FCAU) has rebuilt and substantially updated. Fiat Chrysler sold 29,358 of them in January. This was down 13.1% from the same month a year ago. Ram has an “all new” 2019. It has been forced to offer huge incentives for the 2018 models — up to $11.856 on some models.
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The Silverado discount and similar offers on some Rams drive down the profits on these products. Since each of the three large U.S. car companies counts on these products for a tremendous part of their sales, they need to struggle with whether they can make money on the pickups as they fight for sales.
A price cut of $9,678 for the Silverado is only a symptom of a larger problem.
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