GM sees gains in pickup truck segment

Reuters

Wednesday September 13, 2:08 pm ET

By Jui Chakravorty

Link to Original Article @ Yahoo!News

DETROIT (Reuters) - General Motors Corp.'s (NYSE:GM - News) new warranty program will give the automaker an edge in the highly competitive market for full-size pickup trucks, a segment where GM will likely gain market share in the near term, a top company executive told Reuters on Wednesday.

Brent Dewar, vice president of sales, service and parts, also said that the world's largest automaker is on target to sell 3 million vehicles in U.S. showrooms this year, almost unchanged from 2005.

"We're on track ... It's going to be almost flat year-over-year," he said at the Reuters Auto Summit in Detroit.

"We had some tough (comparisons) in the June-July time frame," he said. "We will beat our retail numbers on the back half of the year."

GM is trying to recover from a $10.6 billion loss in 2005. The company's near-term strategy hinges on selling new pickup trucks and sport utility vehicles -- models with the largest profit margins -- to help revive North American operations.

Last year, GM spearheaded a massive incentive program that offered employee discounts to all consumers, boosting sales through the summer by luring people into showrooms sooner, but subsequently weakening sales for the rest of the year.

In keeping with its recently-launched plan for clearer pricing and reduced spending on incentives, GM has cut its incentive-spend by $900 per vehicle, on average, so far this year, Dewar said.

GM's new five-year, 100,000-mile powertrain warranty on 2007 models will help the carmaker take sales from rival brands in the pickup truck market, a segment that has suffered because of declining U.S. housing starts and higher interest rates.

"(The new warranty) is a huge enabler on full-size pickups," Dewar said. "It's a real plus."

PICKUPS MEAN PROFIT

Pickups have been a source of profit for the Big Three U.S. automakers - GM, Ford Motor Co. (NYSE:F - News) and DaimlerChrysler AG's (XETRA:DCXGN.DE - News) Chrysler Group, which have steadily lost share in small and mid-sized cars to Asian brands in recent years.

Dewar said GM's 24-percent share of the U.S. market is probably sustainable.

"We think that's probably a good number," he said. "In days gone by, we might have been driving that number harder."

He also said he expects resale values of GM vehicles to rise through the rest of 2006, boosted by the new warranty program. So far this year, GM's resale value is up 7 percentage points on cars and 3 percentage points on trucks.

GM's vice chairman of global product development, Bob Lutz, earlier this year said U.S. market share is sustainable in the low-to-mid-20 percentage range over time.

The company plans to launch the GMC Sierra and Chevrolet Silverado pickup trucks later this year to compete with Ford's F-Series pickup and the upcoming Tundra pickup from Toyota Motor Co. (Tokyo:7203.T - News).

GM is also banking on the success of three new crossover vehicles -- which generally look like SUVs but are built on the underpinnings of a car and are more fuel efficient. GM plans to launch the GMC Acadia, Buick Enclave and Saturn Outlook models early next year.

Total U.S. vehicle sales, including heavy trucks, are running at an annualized rate of about 17.1 million units so far this year, and GM expects the industry to end the year at about 17 million.

Dewar said he expected the U.S. market industry-wide to remain near current levels in 2007.

"When we weigh it all in and we look at where we think interest rates are going to be next year, where we think crude (oil) will be next year, we still see a pretty strong marketplace here in the United States ... " he said.

This should work quite well with the new trucks...

If it's offered on the 06 trucks-they won't have to fire sale em'...

Hmm.. Funny how Toyota is slowing down truck production, isn't it?