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GM: U.S. Sales Suggest Good Pricing Contribution for Earnings

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General Motors Co
(GM)

Throughout the week of July 3, automakers have reported June or second-quarter sales. Wards has June sales up 19.9% year over year and the month’s seasonally adjusted annualized selling rate at 15.68 million, up from 13.05 million in June 2022. J.D. Power said on June 23 that the month’s incentives were tracking to rise 95.9% from June 2022, but that is off a low base of $918 per vehicle. With J.D. Power putting incentives as a percentage of average transaction price at only 3.7%, we don’t see sales reliant on discounting, plus the most expensive trim packages continue to be in demand. We expect third-quarter demand to remain healthy amid continued pandemic and chip shortage recovery. Inventory continues its slow recovery from the chip shortage with end of May stock at 1.81 million well below prepandemic levels of mid-three-million to low-four-million units.

General Motors GM reported second-quarter sales on July 5 showing year over year growth of 18.8% and June 30 inventory up 3.8% from March to 427,973 units. All four brands posted increases with Buick leading the way at 47.8% thanks to nearly doubling delivery volume of the Encore GX and Envision crossovers. Cadillac had its best second quarter since 2019 with all its models except the XT6 crossover growing. The Escalade full-size SUV rose 25.3% and Cadillac will unveil the all-electric Escalade IQ in New York on Aug. 9. It will go on sale late this year or early 2024. Also encouraging on the lucrative SUV front is the Chevrolet Suburban and Tahoe posted their best first half of the year sales since 2007 and about 75% of their second-quarter sales were from the brand’s four premium trim offerings. We calculate GM’s total quarterly pickup truck volume rose 4.1% excluding the medium duty Silverado while the full-size Silverado and Sierra grew 6.3% excluding medium duty. GM said the GMC Sierra had its highest ever penetration of AT4 and Denali trim at nearly 50% of Sierra light-duty model sales and 70% for the Sierra heavy duty.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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David Whiston

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007.

Before Morningstar, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner. In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011.

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