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GM's problems go beyond recall

Daily Ticker

Is General Motors (GM) talking out of both sides of its mouth? Reuters reports that GM has been offering deep discounts on its pickup trucks to lure buyers at the same time telling Wall Street analysts that it "intends to maintain premium pricing and margins" on the trucks. Reuters was given access to data that showed GM was increasing the incentives on its trucks last month; discounts averaged up to $5,972 on the Silverado 2500HD and 3500HD models and $3,593 on the Silverado 1500, according to Reuters.

"GM is in a conundrum," says Dan Colarusso, executive editor at Reuters. The Detroit automaker needs to discount on the lower end, he explains, and reassure Wall Street that the company is making money on its trucks.

"Trucks make Detroit," he adds. "Trucks are the margin drivers..they make everything else possible."

GM said its U.S. auto sales dropped 1% in February to 222,104 vehicles, above analyst estimates of a 6% decline. Sales of GM's popular Chevy Silverado pickup slipped 12% even as sales of Ford's (F) F-Series pickups rose 2.6% and Chrysler's Ram 1500 pickup gained 26% in the same month.

Related: Ford bets on a real recovery

Kelley Blue Book analyst Alec Gutierrez told Reuters that GM did not sell as many trucks as its competitors because its new truck models were similar to its rival's current models. GM trucks also have a higher average-per-vehicle transaction price than Ford's.

Worries over GM's truck sales may be the least of GM's concerns. The world's second-largest automaker is battling federal regulators and facing potential litigation related to a defective ignition switch that has killed 13 people and forced the recall of 1.6 million cars. So far, the company has declined to speak publicly about the ignition problem or the recall.

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