U.S. new car sales are widely predicted to be lower this year and automakers have been both reducing production and offering incentives to keep inventory levels at normal levels. Rising inventories have been a particular problem for General Motors Co. (NYSE: GM) and the company is offering some strong incentives to buyers of its best-selling Chevrolet Silverado pickups.
While the total incentive varies by dealer and region, GM is offering a price reduction of around $2,800 on all its 2017 Silverado 1500 LT pickups. Other dealer incentives can add as much as $5,000 to that. For example, a Chicago dealer is selling a Silverado double cab with four-wheel drive with an MSRP of $39,965 and installed option packages valued at $4,240 for $37,682, a savings of about $7,700.
GM sold a total of 50,515 pickups in June, a year-over-year increase of 1.7%. And that was the company’s best month so far this year for total sales of Silverado pickups.
Ford Motor Co. (NYSE: F) sold nearly 78,000 F-Series pickups in June, a rise of 9.8% year over year. According to a report at Forbes, Ford’s offer of $5,250 cash back on an F-150 is the best deal of the month. A different deal from the one we mentioned earlier on the Silverado is the second-best deal of the month, and the third-best is an incentive from Fiat Chrysler Automobiles NV (NYSE: FCAU) offering up to $4,750 cash back or $3,250 cash back and 0% financing for 36 months.
All three U.S. carmakers are making their best incentive offers on their best selling vehicles. The automakers make more of these pickups than anything else and they need to sell them because passenger car sales are tumbling and SUV/crossover sales are no longer rising at their recent record pace.
The automakers will sell what they have and take a bit less margin on each pickup because the trucks have such a high markup to begin with. But they have to sell them or their inventories will continue to pile up and that’s when the bad news gets worse.