GM Posts Profit, Bumps up Truck Discounting
General Motors Corp. (GM) CFO Fritz Henderson said Tuesday (July 31) that the automaker will do what it takes to stay competitive in the critical U.S. pickup truck market, including ramping up incentives and taking tactical production-capacity actions.
Dow Jones reported that the executive also expressed uncertainty over the direction of the U.S. economy, but didn’t go into detail on GM’s expectations for the second half of the year in North America.
Henderson, speaking to reporters after the company posted an $891 million net profit for the second quarter, said it is still unclear how broader volatility in the financial markets will impact consumers. The automotive industry has been pressured mostly by high gasoline prices and fuel prices.
GM’s June sales in the U.S. market were mildly “disappointing,” according to Henderson, and the overall economic picture recently “has not been for the faint of heart,” Henderson said.
Analysts expect GM’s July sales to be disappointing, and GM recently had to bump up incentives on its profitable pickup truck lineup as the overall economic backdrop in the U.S. is showing signs of weakness.
“We think we have the best pickup in the business,” Henderson said. Still, when asked if he was concerned that the company had to ramp up incentives on its newly redesigned Chevrolet Silverado and GMC Sierra, Henderson said, “Yeah.”
GM on Saturday launched a campaign that attempts to lure pickup truck buyers with 0% loans that span 60 months. The offer, considered semi-aggressive in scale, lasts until Sept. 4 and is applicable to most of the company’s full-size pickup trucks.
Henderson said the automaker will continue to take “tactical actions” in its quest to be a dominant player in the U.S. truck market, which makes up more than 15% of the entire light-vehicle volume in the U.S. The company is trimming jobs and output at one plant in order to address softness in the pickup market, but Henderson said that is an isolated activity and not a sign that GM’s overall capacity-reduction scheme needs to be adjusted.