General Motors Company's Management Hosts US Sales Conference Call (Transcript)

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Executives

Jim Cain - Communications

Kurt McNeil - VP, US Sales Operations

Alan Batey - VP, US Sales and Service and Interim Chief Marketing Officer;

Don Johnson - VP, Chevrolet Sales and Service;

Scott Bell - Director, Sales Operations, Buick and GMC;

Don Butler - Vice President, Cadillac Marketing

Mustafa Mohatarem - Chief Economist

Analyst

John Murphy - Merrill Lynch

Rod Lache - Deutsche Bank

Chris Ceraso - Credit Suisse

Itay Michaeli - Citigroup

Colin Langan - UBS

Tim Denoyer - Wolfe Trahan

Dee-Ann Durbin - Associated Press

Ben Klayman - Reuters

Todd Lassa - Automobile Magazine

Rebecca Lindland - Rebel Three Media

Nathan Bomey - Detroit Free Press

Melissa Burton - Detroit News

Tim Higgins - Bloomberg

Operator

Ladies and gentlemen thank you for standing by. Welcome to the General Motors Company March 2013 US sales conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded, Tuesday April 2, 2013. I would now like to turn the conference over to Jim Cain, GM Communications. Please go ahead sir.

Jim Cain

Thank you very much and welcome to the March sales call for GM. We will follow our usual format today with some prepared remarks followed by Q&A, and we are following yesterday’s important news with an equally good month. So I will turn the floor over to Kurt with just a remainder that we are covered by our usual disclosures of forward-looking statements. Thank you.

Kurt McNeil

Thank you Jim. Good morning everyone and thank you for joining us. Today we are announcing March sales of 245,950 vehicles. This is our best result for any March in five years and our third consecutive month of higher retail and total market share. We estimate that our total share for the quarter will be up about 0.5 point. Our retail share increase will be even larger, and we expect to have one of the largest increases for Q1 in the industry.

Our deliveries were up in March about 6% in an industry that's up about 3% to 4% on an absolute volume basis. We estimate that the light vehicle SAAR was about 15.2 to 15.4 million units, which is in line with our full year forecast. This month marks the industry’s fifth consecutive month above a 15 million unit SAAR. The economic picture looks pretty similar to the last couple of months, which helps explain why the industry has stayed in a relatively healthy range.

The housing market continues to recover; business spending has picked up; and pent up demand for vehicles are offsetting any drag from tax or federal spending issues. Among our four brands Cadillac and Buick were stand outs in March, with sales up about 50% and 37% respectively. In fact Cadillac is the fastest growing full line luxury brand, and in March two-thirds of our customers were new to the brand. We are playing offence especially with Buick and Cadillac and they are clearly benefiting from our steady rollout of new product.

Importantly our full port crest includes bold entrants in segments where we didn't compete before and we are really making waves. For example the Buick Verano in the compact luxury segment was up 43% year-over-year. Similarly the Buick Encore our all new small crossover is off to a fast start. We delivered more than 3000 Encores in the vehicle’s second full month on sale. This gives us first mover advantage in what should be a very fast growing market.

Buick and Cadillac will continue to benefit from new products throughout the year. The all new Cadillac XTS continues to win customers from Lexis, Lincoln and Mercedes Benz, and the ATS is doing very well in the most competitive segment in the luxury market conquesting from both Mercedes and BMW. March deliveries were the best since its launch. Similarly, the redesign Buick Enclave had its best March ever. A lot of the Enclave’s momentum is being driven by its outstanding royalty rates. Sales were up 55% and about 40% of buyers were drivers of the first generation Enclaves.

In the fall, we will follow up with the redesign Buick Regal and LaCrosse, as well as the all new Cadillac CTS. All three were unveiled last week at New York Auto Show. The new CTS in particular is stunning. It's longer, slower, lighter and more luxurious which should set it up very well against the German imports. Not only is it lighter than the previous model. The new CTS will be the lightest car in its class, more than 200 pounds lighter than the comparable BMW 5 Series, and you can only imagine how it will perform especially fitted with our new 420 horsepower twin turbo V6 and an 8 speed transmission.

At Chevrolet, our SUVs and crossovers had a very good month with the Tahoe, Traverse and Equinox all posting higher sales. The Tahoe was up 39% and the Equinox was up 5%, but the real breakout was the redesigned Traverse, which saw a 54% sales increase. Customers are really embracing the redesigned interior and exterior along with its full suite of technology and safety upgrades. The Traverse along with the all new Acadia and Enclave has helped GM gained 2.5 points of retail share in the midsize utility segment so far this year.

On the car side of the business, the Chevrolet Cruze also had enough standing month with sales up 17% for its best retail sales month ever. Total sales were up 8%. We also continue to build momentum with the new Malibu in a very competitive segment. Sales increased 25% month-over-month and were the highest since launch. The Impala meanwhile is transitioning to an all new design that has been very well received by the media and our dealerships. The new model is in production and the first units are on their way to dealerships as we speak.

Our real bright spot for Chevrolet has been smaller vehicles. Chevrolet mini, small and compact cars were up 9% in March versus a year ago and Spark had its best month ever. The success of the Spark, Sonic, Cruze and Volt is paying both short and long-term dividends; ccertainly the sales and share contributions are important in near term, but the fact that more than half of our buyers are new to General Motors is even more important to our long term success. More than 60% of Spark, Sonic and Volt customers are coming from non-GM brands.

On the truck side of the business, another strong month for Silverado and Sierra keeps us on track to have an orderly transition to our all new designs. Combined sales of our large pickups were up 6% and our inventories are in line with our plans. As we speak, we are about a month or so away from the launch of the first of the 2014 model year Silverados and Sierras and the excitement is definitely building.

Just yesterday we announced our incredible performance, pricing and fuel economy stories. The highlights; carry over pricing for Silverado, two years of free scheduled maintenance, best-in-class tooling capability and VA8fuel economy that solidly beats competitors V8.

Even more notably we beat Ford’s EcoBoost V6 by a full MPG on the highway in both two wheel drive and four by four models. Indeed the depth of the V8 engine has been greatly exaggerated at least for General Motors. Thanks to technologies including variable valve timing, direct injection and cylinder deactivations. It’s counterintuitive to some folks so when one of GM's all new 5.3 liter V8 runs as a four cylinder, it produces enough torque to stay in that mode for a very long time, which helps return better fuel economy than smaller turbo charged engines. This is a very big deal especially for our truck customers who want power of a V8 when they need it for acceleration following our towing and the fuel efficiency of a smaller engine when they don't.

We have a winning combination of design, performance and value which should drive our average transaction prices higher through a combination of mix, option penetration and lower incentives.

In summary, 2013 is off to a very good start for General Motors on both a product and market share basis. And we are increasingly well positioned to compete as the economy strengthens and our launch cadence accelerates.

With that said, its now time for the Q&A portion of our call. Joining us are Alan Batey, Vice President of US Sales and Service and Interim Chief Marketing Officer; Don Johnson, Vice President of Chevrolet Sales and Service; Scott Bell, Director of Sales Operations for Buick and GMC; Don Butler, Vice President of Cadillac Marketing and our Chief Economist Mustafa Mohatarem.

Okay, let's take some questions.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of John Murphy with Merrill Lynch. Please proceed.

John Murphy - Merrill Lynch

I have three questions for you, first on the ATS, I was just wondering you mentioned that the Conquest rate was very high, I'm just curious where you are conquesting those sales from and then also as we think about the ATSs your entry level vehicle there, any trade these buyers ultimately up to the CTS and the XTS as you think of that purchase cycle the buyer you did a great job with the ATS how long does it take to get them into the CTS at the next level maybe XTS and the level after that?

Don Butler

This is Don Butler and the answer to the question, first we are very, very pleased and excited about how well ATS is doing. Significantly more than half of those customers that are buying that vehicle are disposing off a competitive make and we are happy to say that those makes include BMWs, they include Mercedes Benz, they include Lexus.

It is as you mentioned a great way to bring people into the Cadillac franchise and depending on the purchase cycle I mean you are talking about a two to three year lease and that would be the typical exchange of someone potentially moving from an ATS to the CTS.

The other important thing with ATS is roughly 70% of those buyers are new to Cadillac. So it’s safe to say if we didn't have this vehicle, we'd be missing out on a huge chunk of the marketplace. So it bodes really well for our near-term and bodes really well for the future as well.

John Murphy - Merrill Lynch

And then maybe second question on the large CUVs are kind of the mid CUVs and so it is mid cycle major, I mean do you think these mid cycle majors that you are doing at this point are much more significant than they have been in the past and we are going to see these better sales results sort of in the mid cycle as you are doing something that's a little bit more major than it has been in the past, just try and really gauge is it (inaudible) it’s a lot more significant than it has been historically?

Don Butler

Yeah, I think so John, you know, significantly upgrades to both interior and exterior. You know, for us to be up 62%. We saw across all three vehicle lines. You know, it's very positive and we think it's indicative. You know, we've been talking a lot about housing and people coming back in the pickup and the success of mid utilities and full size utilities and small utilities. We think it speaks to your company getting stronger and American families getting back into the marketplace as well.

John Murphy - Merrill Lynch

Okay, and then just lastly on the Malibu, it was down 22.4% on a year-over-year basis. Just curious what was going on there? Is that the high competition or it was just something going on with fleet deliveries where there was something that fell out in the months to try and understand the weakness there on a year-over-year basis?

Don Johnson

Hi John. It's Don Johnson with Chevrolet. I think there is couple of things happening. Most importantly, you know, when you look at the month-over-month gain as Kurt said, Malibu is up 25%. You may recall that a year ago, we were in clear out mode on the old model.

So that’s everything what's making the year-over-year comparisons tough. I mean, clearly it's a very competitive segment but it's really that month-over-month trend that we really like right now, positively we trending like I said the best month since the launch of the 2013.

Operator

Thank you. The next question comes from the line of Rod Lache with Deutsche Bank. Please go ahead.

Rod Lache - Deutsche Bank

I have a question on your large pickup truck performance in the quarter and just what you were seeing in the month and what you are seeing in the segment. It looks like your increase was a little bit less than we saw for the segment overall. Is this a matter of maybe the [three-year] schedule maintenance being realized yet by the customers or is there some changes in the incentives in the month that may account for the performance?

Kurt McNeil

Well my initial response would be first of all, we are seeing good growth in the segment. So as a percent of industry, it's I think 1.2 percentage points versus for the quarter versus a year ago and if you look at that same quarter, our full size pickup truck 21%. So we feel pretty good about the quarter and how we are doing as we transition.

Rod Lache - Deutsche Bank

Okay and would you expect, I mean now that the new truck has been launched, do you expect any movement up in incentives to clear out the remaining all to be 2013 model?

Kurt McNeil

Well, we are always going to stay competitive but if you take a look at that same quarter, our incentive trends are actually down a little bit, the segment is up about a $170 and meanwhile even though our incentive spent is down, our ATPs are up about $500. So I think we are staying pretty disciplined.

Operator

Thank you. The next question comes from the line of Chris Ceraso with Credit Suisse. Please go ahead.

Chris Ceraso - Credit Suisse

I had a question about CPS for the sales there looks relatively weak, can you comment if this is a supply issue, because you are getting ready to change it over to a new model or is it cannibalization versus the ATS or both?

Don Butler

This is Don Butler again from Cadillac. As we transition to the next generation CTS, part of our plan has been to make sure that our production rate match what was reasonable in the marketplace, understanding that will bring an ATS below and XTS above, so this was planned to be a transition year. What we are happy about is that we are able to maintain our level of profitability around that vehicle, able to maintain the sales rate that we had planned on to it.

It's all part of our planned transition and as you can see from our total sales been up 50%, we still feel pretty good about where we sit and our plan is working as we had originally laid out.

Chris Ceraso - Credit Suisse

Okay, and then on the Malibu, I mean I am not sure how relevant that is compared February to March, March is just a bigger months for the industry period, the vehicle is down 16% year-over-year for the full quarter, is this really meeting your expectations, we are hearing that there may be a redo or an updated vehicle sooner than normal, can you speak to that?

Don Butler

Yeah, when we look at month-over-month of the industry change, it is important to look at segment share and we are actually holding segment share about eight months, February was a best segment shares since June, March is tracking right along as the same level. So again, we are please with the share of that sale we are getting. Having said that, we also know with the number of competitors has introduced new products. So it that continues to be the most competitive segment in the market.

Chris Ceraso - Credit Suisse

Okay, and then just lastly on the Regal and the Verano, can you just explain what the relative positioning is there, how are consumers expected to view those to side-by-side or how is Buick promoting those vehicles, what role do they play?

Scott Bell

Yeah, this is Scott Bell. And we talked about this in the past but the three sedans really play, they all have their unique role right, so Verano has been, its our Conquest leader in the channels in the Buick line up, and Regal has played (inaudible) positioned the car to be lead of the family if you will, its getting our youngest buyer and of course LaCrosse has been our flagship since we launched it in the 2010 model year. So we just announced the two new cars in New York. We are excited with those getting here later this year, and if you look at the sedan portfolio we feel good about where we stand. We are selling more sedans than we've sold in years. So.

Operator

Thank you. The next question comes from the line of Itay Michaeli from Citigroup.

Itay Michaeli - Citigroup

So a question on the pickup truck inventory. You mentioned you are still comfortable with the amount of inventory, can you talk a little bit more about what drives your comfort, maybe talk about what you are expecting the segment share to be over the next couple of quarters and perhaps give us an update of what the sell down of the inventory might look like over the next several months.

Kurt McNeil

Well, I think I said that the segment is up for the quarter, first quarter; our share is up about two points in the first quarter. We've been working on this for about 17 months now of planning all of the various issues. So as you look at our current inventory levels we are very comfortable where we are. We see a lot of competitive activity, like I said we've been very disciplined from an inventive standpoint, while increasing our ATPs. Having said that, we will respond competitively, our competitors are not sitting still. If you look at some of those with some of the newer pickups in the marketplace, they are getting very aggressive. But we are very confident where we are currently on the current path.

Itay Michaeli - Citigroup

And just lastly can you talk about the strength in the full size SUV segment in the market; it didn't look like incentive spending was up through the middle of the month. So what drove the strength this month relative to last year?

Kurt McNeil

Yeah, our full sized utilities Tahoe, Yukon were up 25%. I think it’s a combination of a couple of things, one, like I said positive economic news, bring in families back into the marketplace and relatively stable fuel prices. That's helping in that space, so I think it’s a combination of those two things.

Operator

Thank you. The next question comes from the line of Colin Langan from UBS.

Colin Langan - UBS

Any color, I think you said in the next few months you will get the new pickup on to the market. But my impression is that the transition is going to take a while for this changeover, how long will the old and new models be on the market together. When do you think you will have all the inventory at the dealers, the new model and how are you going to price those, how are you going to respond to having for an extended both the old and new market at the same time.

Don Johnson

Colin its Don Johnson with Chevrolet; when you look at our sell down of our current model right now as we are looking to ramp up the new one, you look at our incentive and pricing plans out there, you can see that we've got a plan in place to have an orderly sell down and a very clean start up of new model (inaudible) coming out first, its very important given that that's the biggest segment in the truck market. But we've gone through this many times and we anticipate based on our plan that we will do that in a very orderly fashion. We know that as all the pickups exit the market that there are a number of customers in the market for that type of pickup, it's often a slightly different customers looking for the brand new ones. So we think that they will have something to appeal to both of those customer types for the rest of this year and we expect that through the year we will have some of the current pickup on ground as we move through the transition.

Colin Langan - UBS

Okay and just one another question. Any color on overall incentives for the month on your ATPs and I think you’ve commented on pickups but for overall?

Kurt McNeil

Yeah, I mean, just overall for the month-to-month of March, year-over-year, we are up about 180 bucks Colin, but ATPs were up almost $400.

Colin Langan - UBS

Okay, that’s year-over-year?

Kurt McNeil

Yes.

Operator

Thank you. The following question will conclude the analyst portion. Following this question, we will proceed the media portion of the question-and-answer session. (Operator Instructions) The final analyst question comes from the line of Tim Denoyer with Wolfe Trahan. Please proceed.

Tim Denoyer - Wolfe Trahan

Just a couple of different ones; on the economy just in general, can you give us a sense of the tax and spending headwinds which you mentioned were certainly being offset by pent up demand. Are you expecting that to become more of a headwind as the year progresses and are you seeing any signs in terms of trim level mix that that’s having any impact around the margin at this point?

Kurt McNeil

Well, Tim, I will handle the economy and maybe I will ask one of the channels to weigh in on trim and mix. The only negative or real headwinds we see are higher taxes and potentially lower government spending. Everything else seems to be pretty positive, jobs housing which we have been talking about for a while, availability of consumer credit, autos, stock market performance obviously is helping, and fuel price stability is also a positive. So we do see the positives far outweighing the negatives. I think most Americans are pretty tired of what goes on in Washington. So they’ve started to tune that off a little bit, but all-in-all we just continue to see this slow steady growth five months of over a 50 million unit SAAR kind of speaks to that. So we see that continuing Mustafa you got anything to add to that?

Mustafa Mohatarem

Thanks. I think fundamentally the economy was a lot stronger, the fundamentals of the economy than had been anticipated. So the customers, the economy have handled the dysfunction in Washington very smoothly at this point. In fact the economy is running stronger than most people had forecasted for the first quarter, so very confident with the underlying strength of the economy.

Don Johnson

It’s Don Johnson, just on the mix question, there’s nothing that we can see that is suggesting that mix s starting to deteriorate at all right now.

Operator

Thank you. Our first question from the media comes from the line of Dee-Ann Durbin from the Associated Press. Please proceed.

Dee-Ann Durbin - Associated Press

Hi thanks so much for taking the call. I am wondering if you continue to see sales at this level. Are you thinking and what you have to hire more people, increase production and also whether you are seeing discretionary buyers returning to the pickup truck market or are the people buying still just basically the people who need these trucks for what they do?

Kurt McNeil

Yeah, Dee-Ann like I said, we continue to see slow and steady growth, so we have the ability to ebb and flow production on an as needed basis, maintaining certainly doing it in an efficient manner. As far as the truck sales are concerned, like I said, we do continue to see that fuelled primarily by growth in housing. If you look at small businesses which are mainly retail sales, where people are buying [wonderful] trucks, that’s up about 32%. So we are seeing the good, housing is good and individual that make their living as a result of that buying trucks.

Operator

Thank you. The next question comes from the line of Ben Klayman from Reuters. Please proceed.

Ben Klayman - Reuters

Hey, Kurt, you mentioned in your comments that the new pickups were going to drive higher ATPs and lower incentives, and I was hoping you could on some level quantify that, whether its some kind of percentage up or down as the case maybe in those areas over whatever period, whether its by the end of the year or by this time next year to, give us a sense as to what impact the new trucks will have?

Kurt McNeil

Yeah, Ben, I can't quantify it for you, I am sorry. But when you look at the fact that we introduced all that exciting new technology with no charge maintenance, you know industry leading fuel economy and then the carryover pricing, I think it just leads itself to be in a very strong competitive position to take full advantage of that. So for us that's higher ATPs and lower incentive spend but I can't quantify it for you, I am sorry.

Ben Klayman - Reuters

And then one follow-up, the trucks overall were down, you know, the growth rate was slower for the month than your overall rate. I see that Silverado was up 8.4 while the Sierra down slightly or flat in essence almost flat.

Scott Bell

Yeah, this Scot Bell, yeah we had a flat, the quarter we were actually up 18%. So I mean, we've had a bit of strong run here for the first quarter with Sierra and our ATPs are actually up I think over $1,400. So we are feeling pretty good about our performance despite...

Ben Klayman - Reuters

But again for the month though, it was up 0.2%, was there a particular reason for that?

Scott Bell

Not that I can quantify. I mean it was a good month for us.

Operator

The next question comes from the line of Todd Lassa with Automobile Magazine. Please proceed.

Todd Lassa - Automobile Magazine

My apologies you've covered this, I missed the early part of the call, but what happened with Chevrolet Volt, you had a big drop in the last month even though you are ahead for ahead for the quarter?

Don Johnson

Yeah, its Don Johnson with Chevrolet, you know a couple of things going on there. First of all, compared to last year we are much more stable in our month-to-month sales and being up 8% year-to-date again, we are feeling good about the trend. You know, retail sales were actually up 4% month-on-month. We did have a drop in fleet sales.

But clearly some of our competitors have been very aggressive with (inaudible) in their product and coming out with extremely aggressive leasing but when you look at who the customer is, I think the technology really does speak to itself. So we are expecting for the rest of the year to continue to grow with the seasonality and again have a much more stable sales rate.

Todd Lassa - Automobile Magazine

And can you repeat one more time your overall market share and the change versus last year at GM?

Don Johnson

From a share standpoint, we are going to be up half a point for a total share and the retail share should be even higher than that for the first quarter.

Todd Lassa - Automobile Magazine

Okay, so what level of double share would be for the first quarter?

Don Johnson

Going to be about 17.7.

Operator

Thank you. Our next question comes from the line of Rebecca Lindland with Rebel Three Media. Please proceed.

Rebecca Lindland - Rebel Three Media

I had a question in general on geographical split for sales and where you basically seeing growth particularly on the eastern and western portions of the country and then Don Butler from Cadillac, how are you doing on the ATS in terms of sales in the New York Metro area. Thank you.

Don Butler

Let me get the specific number for you in the New York Metro area. I just know ATS overall is doing really well and then in terms of the comment related to geographic areas another thing we are really pleased with from a Cadillac standpoint our sales in California are up 34% through the quarter and in important markets like San Francisco and San Diego where quite candidly we haven't done as well in the past. We were up over 50% in San Francisco. We were up almost 48% in San Diego with Cadillac. And much of that is driven by ATS. We will give the specific numbers for you on the New York area.

Operator

Thank you. The next question comes from the line of Nathan Bomey from Detroit Free Press. Please proceed.

Nathan Bomey - Detroit Free Press

Just curious if you could just talk a little bit more about Cruze and the growth there. I mean you said that, if I recall, lot of its retail. I heard from some dealers that some people were bumping up to Malibu because of the incentives there but you are still up on Cruze. Could you just give us a little more color on what happen there?

Don Johnson

Yes, Don Johnson with Chevrolet. You are right. Cruze had a great month, had its best retail month since launch. I think when you look at the total portfolio of cars that Chevrolet has, clearly you are going to see some cross shopping between them. I think the important takeaway as we talk a little bit before is when you look at our smaller car portfolio, we continue to grow that. So while they are some interaction, I think the main thing to look at is the entire portfolio.

Nathan Bomey - Detroit Free Press

And did you incentivize little heavier on Cruze because of what's happening with Malibu just because you need to maintain that share?

Don Johnson

No because we make sure that we keep a pretty logical price ladder and lease ladder between all the products. So nothing out of the ordinary this month.

Operator

Thank you. The next question comes from the line of Melissa Burton with Detroit News. Please proceed.

Melissa Burton - Detroit News

I just had a question on full size trucks. I was wondering if you can give us any information on fleet for the month. How are you on fleet and government sales?

Jim Cain

We're (inaudible) here, Melissa. Hold on a second.

Melissa Burton - Detroit News

Alright I just have one other quick thing too; you want me to ask for…

Jim Cain

Sure.

Melissa Burton - Detroit News

You and Kurt had mentioned that you believe there would be kind of may be two buyers really for trucks this year. You know, somebody that would be working at kind of old truck that might be interested in the adverse of the new truck and I was wondering if you kind of give us a little bit of an idea what you mean there, what kind of buyer you would see for the old truck versus the new truck?

Don Johnson

Yes Don Johnson. There was a comment that I had make...

Melissa Burton - Detroit News

No, I am sorry...

Don Johnson

Typically when you see a crossover or a change over from the old to new, the buyer for the older truck is probably a little bit more price motivated and the buyers for the new truck is little bit more feature technology motivated.

Melissa Burton - Detroit News

Okay.

Jim Cain

And Melissa your question about fleet was that directed at full size utilities?

Melissa Burton - Detroit News

On trucks.

Jim Cain

On full size pickup.

Melissa Burton - Detroit News

Yes.

Jim Cain

So like for example, we sold about 40,000 Silverados, under 8,000 were fleet units.

Melissa Burton - Detroit News

Is that pretty typical for a month or?

Jim Cain

About yeah I would say so.

Operator

Thank you. The next question comes from the line of Tim Higgins with Bloomberg. Please proceed.

Tim Higgins - Bloomberg

Don, can you may be talk a little bit about the ATS and kind of the sales rate here, are you thinking of peak or are you still see rooms to kind of continue to grow in this vehicle, kind of going forward and also you maybe talk little bit about your inventory levels as well?

Don Butler

Sure, we have consistently have month-over-months high levels for ATS and so this month is the highest that we had to-date. We expect actually to turn that trend to continue one of the interesting things about ATS, if you look at some of the research on the early buyers as we talk about earlier in the call more than half of those buyers are disposing our competitor vehicle.

Almost 70% of them are new to Cadillac, the other thing is 80% of those buyers have increase their opinion of Cadillac as a result of experiencing the ATS and actually a vast majority of those people, the other folks who already had a high opinion of Cadillac but when I coupled the fact that, we bring in competitive buyers, we are increasing opinion of Cadillac with ATS, ATS itself on the road access great advertising word of mouth from me, so I expect the trend to continue.

From an inventory standpoint, we are pretty comfortable with where we are as we head into the spring selling season and our dealers are very comfortable as well. Now that we have the three sedan portfolio, we had to steady out kind of our mix and but we feel really good in terms of where we are positioned now for the spring selling season.

Operator

Thank you. Your last question comes from the line of (inaudible). Please go ahead.

Unidentified Analyst

All right, I want to continue on the trend ATS question, curious if you can give us an idea of the powertrain mix, how that’s flushing out and maybe some on the trends what is going out to the dealers?

Don Butler

Sure, from the powertrain standpoint the two liter turbo which as we expected would be the highest volume powertrain is roughly about 50% of our penetration. The 2.5 liter the base configurations roughly 25% and the [36] is roughly 25%. So, that's essentially what we have projected and as you know as we started that vehicle, we started the two liter turbo a little bit later in the cycle as we had planned and so now we have the right mix from a showroom standpoint.

And then from the standpoint of trends, our mid level luxury trend is the highest volume one. But we still see some good penetration on our premium and on our performance model. So everything is working essentially as we had planned it with ATTENTION. We are getting the right buyers, we are getting them familiar with Cadillac, they are excited about what they see when they experience the product and they are telling their friends and we just expect this positive story to continue.

Unidentified Analyst

And if I could just ask one other thing you say BMW, Mercedes, Lexus, what do you get, why are, what feedback are you getting with a wider juggle shift over Cadillac?

Don Butler

Because of the compelling product. You know, I can do a great job from a marketing standpoint of presenting a great message in the marketplace but honestly when they get behind the wheel, they love it and they are talking about it. We've got tones of anecdotal stories of people being surprised that Cadillac has a vehicle like this and that's why we expect the momentum to continue to grow.

Unidentified Analyst

And so you can't point a one single thing like driving dynamics or…

Don Butler

Certainly, the main reason for purchase within the segment is fun to drive, that's what we design around ATS, nimble quick and fun and the payoff is when you get behind the wheel. I'm driving one right now, I don't want to get out of it because I love it so much and I know our customers are experiencing the same thing, that fun to drive, possible vehicle that we delivered in the marketplace is turning heads and its winning hearts.

Operator

Thank you, Mr. Cain. At this time, there are no further questions. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Jim Cain

Hi, thank you very much and to everyone on the call thank you for joining us. Feel free to call or email if you have any follow-up questions and we will take care of it. Have a good day.

Operator

Thank you, ladies and gentlemen. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you and have a good day.

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