General Motors Corporation (GM) September 2013 U.S. Vehicle Sales Conference Call October 1, 2013 11:00 AM ET
Executives
Jim Cain - Senior Manager, Sales and Executive Communications
Kurt McNeil - U.S. Vice President, Sales
Alan Batey - Senior Vice President, Global Chevrolet Brand Chief & U.S. Sales and Marketing
Don Johnson - Vice President, Chevrolet Sales and Service
Brian Sweeney - Vice President, Buick GMC, Sales and Service
Ed Peper - Vice President, Fleet & Commercial Sales
Sue Yingzi Su - Senior Economist
Analysts
Liz Suzuki - Bank of America/Merrill Lynch
Brian Johnson - Barclays Capital
Colin Langan - UBS
Joe Spak - RBC
Rod Lache - Deutsche Bank
Patrick Archambault - Goldman Sachs
Tom Krisher - Associated Press
Brent Snavely - Detroit Free Press
Nathan Bomey - Detroit Free Press
Mike Colias - Automotive News
Jeff Bennett - Wall Street Journal
Melissa Burton - Detroit News
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the General Motors Company September 2013 U.S. Sales Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded, Tuesday, October 1, 2013. Your speakers for today are Kurt McNeil and Jim Cain.
I would now like to turn the conference over to Mr. Jim Cain of GM Communications. Please go ahead sir.
Jim Cain
Hi, good morning and welcome to our September sales call everybody. As we always do, we will have introductory remarks from Kurt McNeil, who is our U.S. Vice President of Sales Operations and then we’ll open the lines for Q&A and we have subject matter experts from all of our brands here today as well as Sue Yingzi Su, our North American Economist. And finally, I will just remind everyone that discussion is covered by our disclosures around forward-looking statements. So Kurt, the floor is yours.
Kurt McNeil
Thank you, Jim. Good morning everybody and thank you for joining us. Today, General Motors is announcing September sales of 187,195 vehicles in the United States. Looking exclusively at our retail deliveries, sales were down 6% year-over-year. However, they were up 2% when you adjust for 2 fewer selling days. In an industry context, this means we held our own in terms of retail market share and we did it with incentives that were down about $400 per unit versus the month of August. In fact, the mid-month J.D. Power PIN data shows that GM reduced its incentives more than any other competitor on both in absolute basis and as a percentage of ATP.
Our fleet sales meanwhile were down about 27%. That’s a big change, but it’s not entirely unexpected. As you know, a number of factors have been affecting our fleet volumes, including a temporary discontinuation of our midsize pickups and the repositioning of the Chevrolet Impala. Fleet deliveries of the Cruze were also down about 8300 units, which is due to timing of customer deliveries. We think our fleet mix will end up at about 24% for the calendar year. Looking at GM’s total deliveries for the month, we were down 11%, although Buick and Cadillac had sales increases of 6% and 10% respectively. The playmakers were the all new Buick Encore and the Cadillac ATS, XTS, and Escalade. Several Chevrolet car nameplates also performed quite well in September, including the Malibu and Spark. Malibu sales were up 29% and our stocks of 2013 models are coming down very nicely. Sales of the Spark meanwhile were up 6%.
Turning to trucks, our large pickup sales were down about 10% year-over-year and about 3% on a selling day adjusted basis. Let’s dig into this in more detail. First, our GMT900 sell down has been a phenomenal success. We are down to about 20,000 GMT900 light duty pickups in stock. This has helped to ensure our all new model launch is a smooth one. In addition, buzz is really beginning around the new trucks. For example, the Silverado recently ranked at the top of Consumer Reports’ pickup truck comparison test. And as you all know we are still very much in launch mode. Currently our dealers are building their stock levels of regular and double cab trucks and V6 models. The models all began shipping in July and August. But we are now prepared to give you at least a little more color on the subject of truck ATPs and it’s a great story.
Taking all 2013 and 2014 models into account GM’s full-size truck ATPs are up about $3000 per unit year-over-year and they are up about $800 from last month. This reflects an increasing mix of 2014 models and stable incentive spend on the 2013 trucks. As we have said, we are very pleased with our results so far. But we want to underscore for everybody that ATPs are going to remain a moving target, given all the variables. For example, the numbers I shared reflect early sales of new light-duty trucks that were more than 90% V8s, 70% crew cabs and 60% higher end trim series. This mix will moderate over time as the launch progresses. However, there are variables that should be positive for ATPs including the final GMT900 sell down and the pending launch of the new heavy-duty trucks in the first quarter of next year. We will keep you updated, but as far as we are concerned so far so good.
Before we move to Q&A, I want to spend just a minute or two putting our results into a broader context. August had four weekends plus the Labor Day holiday and it was followed by a September with only 23 selling days. All of this goes a long way towards explaining the month-to-month SAAR decline. That’s why it’s important to look at the full quarter for context. Even with lower sales last month, the third quarter was very strong for GM. We delivered almost 560,000 vehicles to retail customers, which is up 13% versus a year ago. By contrast, the retail industry was up about 10%. All four of our brands posted double digit retail sales increases in the quarter. Chevrolet and Buick were up 13%, GMC was up 12% and Cadillac was up 24%. The all-new Impala was one of the many bright spots. Retail deliveries were up 72%in the quarter and up 64% for the month. In addition, Chevrolet Equinox and GMC Terrain had their best ever September on a retail basis. If you pull back even further and look at our calendar year-to-date results, you can see we have strong momentum in nearly all of the industry high volume and high margin segments.
For example, in the premium segments combined sales of Buick and Cadillac cars were up 15%, large pickups were up 20%, sales of our small, mini and compact cars were up a combined 17%. Large SUVs were up 15%, compact crossovers were up 13% and medium crossovers were up 10%. In addition, sales to our small commercial customers were up 37%. This includes a 59% increase in large pickup sales and a 32% increase in large van sales. These numbers really show how new products and a strengthening economy are transforming our showrooms and driving the business.
As we look towards the fourth quarter, we expect that car buying fundamentals will remain strong. For example, a recent drop in jobless claims signals that we should see further acceleration in payrolls. Add to that an accommodative monetary policy, a recovering housing market, low energy prices and rising household wealth and it’s clear that we should be in good shape going forward.
With that said, it’s now time for the Q&A portion of the call. Joining us are Alan Batey, Senior Vice President of Global Chevrolet, a North America Sales, Service and Marketing; Don Johnson, Vice President of Chevrolet Sales and Service; Brian Sweeney, Vice President of Buick GMC, Sales and Service; Ed Peper, Vice President of Fleet & Commercial Sales; and our Senior Economist, Sue Yingzi Su.
Okay, operator, let’s take some questions please.
Earnings Call Part 2:
