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GM to unveil new pickup even as it boosts deals on current model

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August
The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August

By Ben Klayman

DETROIT (Reuters) - General Motors Co is gearing up to show off its new full-size pickup trucks this week just as the No. 1 U.S. automaker is boosting incentives on its rising supply of the current models.

GM will unveil the redesigned versions of the Chevrolet Silverado and GMC Sierra in Pontiac on Thursday, but consumers will not be able to start buying the new 2014 models until the second quarter next year.

Until then, they will have to be satisfied with getting a peek at GM's plans, while also having the option to buy the current version.

"It's a huge cash-flow machine and it's the first introduction of this product post bankruptcy and that means something just for the psychology for General Motors," said Guggenheim Securities analyst Matthew Stover, who has a "neutral" rating on GM shares.

The rollout of the new trucks and related SUVs, which analysts say generate profits of $12,000 or more, are critical for GM, which filed for bankruptcy in 2009 and received a $50 billion U.S. taxpayer-funded bailout.

While new small cars like the Chevy Cruze have garnered positive reviews, the big pickups and SUVs - Chevy Tahoe and Suburban, GMC Yukon and Cadillac Escalade - remain top draws at dealerships. Their combined U.S. sales rose 11 percent last year to more than 799,000 vehicles.

And even though they are the oldest truck models on the market, GM pickups still ranked No. 2 in all U.S. vehicle sales last year, behind only Ford Motor Co's F-150 truck.

Analysts said trucks and SUVs account for about 60 percent of GM's North American profit, and Citi estimates the new models could bring GM more than $1 billion in additional operating earnings in 2013 and 2014.

GM has told analysts and investors the magnitude of product advancements in the new trucks will be as large as the last redesign in 2006, which helped the automaker gain market share. The new trucks are part of the company's revamp this year and next year of more than 70 percent of its U.S. product portfolio.

Guggenheim's Stover and dealers expect GM's new trucks to offer strong fuel efficiency without sacrificing power so it can better compete with Ford, which has found great success with the F-150 that includes the Ecoboost turbocharged, six-cylinder engine.

Analysts and dealers also expect GM to vastly improve the interior on its big pickups, which start at almost $24,600. Given the trucks' strong brand equity, GM simply needs a strong offering.

"All the dealers are really looking forward to having a new truck," said Steve Hurley, owner of Stingray Chevrolet near Tampa, Florida, adding the Silverado was his top-selling vehicle. "There's no doubt, the Silverado launch is the most key launch of the 13 (Chevrolets) that are coming in 2013."

Hurley, who is on the Chevy dealer advisory council and has seen the new design, touted the 2014 model's more steeply raked windshield, squared off lines and beefier fenders in explaining why he believes it will do well.

In the meantime, GM's inventory of the current Silverados has soared to 139 days worth of supply.

GM has acknowledged its truck inventories were too high, and it would miss its end-year target of having U.S. inventory of no more than 220,000 pickup trucks, or about 85 days of supply. Automakers typically prefer to have closer to 80 days supply of pickup trucks.

Officials last week said they would focus on cutting production rather than profit-sapping rebates, but on Friday nevertheless began offering cash incentives of up to $2,000 on the current models after GM said it was caught off guard by aggressive deals from Ford, Chrysler Group LLC and Nissan Motor Co. <7201.

According to Edmunds.com, November incentives on the Silverado were $4,610 per vehicle sold, compared with $4,533 for Chrysler's RAM 1500 pickup and $4,166 for the F-150.

GM also is offering more attractive leases on the Chevy Malibu and Cruze cars and Traverse SUV. The various deals are for vehicles purchased through January 2.

GM officials said the company's recent ability to raise prices has given it room to boost incentives without hurting itself too much.

"We've always said we'd be competitive and we clearly weren't in some segments, including trucks, last month," GM spokesman Jim Cain. "What we're doing is trying to level the playing field, so there have been enhancements.

"We've come so far from old GM, where incentives were every month the highest in the industry and that was reflected in our poor resale values," he added.

Before the 2008-2009 downturn in the auto industry, U.S. automakers routinely overproduced in order to keep factories running and then piled on consumer incentives to prop up sales.

(Reporting By Ben Klayman in Detroit; Editing by David Gregorio)

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