Smaller Cars Lead to Larger Profits for GM

General Motors Company’s move toward smaller, more fuel-efficient vehicles led to a 27 percent increase in sales last month. Overall, sales of smaller cars like the Chevrolet Cruze are up 50 percent over the last year. Sales of full-sized pickup trucks are up a mere 2 percent for the same period.

GM’s increase in sales came despite a second month of reductions in discounts. The automaker said it reduced the amount of its average discount by about $400 in March. GM’s head of sales, Don Johnson, said the company’s average discount as a percentage of total transaction price was below the industry average.

Sales of fuel-efficient crossover models like the GMC Terrain and Chevy Equinox were also up 28 percent.

Johnson said, “A lot of sales continue to go into the compact car segment as well as the compact crossover segment. We feel that we’re very well positioned to grow our share in some of these key vehicle segments.”

Three years ago, skyrocketing prices at the pump brought GM to the brink of collapse as consumers abandoned gas-guzzling SUVs and pickup trucks for more fuel-efficient vehicles from Asian and European automakers.

The Chevrolet Cruze, which replaced the Cobalt, has injected new life into GM, with total sales of 25,160 units since the model’s launch last September. April retail sales reached 18,470 units.

Newton, New Jersey GM dealer Michal McGuire welcomes the changes to the lineup. “We’re finally seeing the Honda Civic buyer,” he said. “We just took a Civic trade-in over the weekend.”

With prices at the pump continually inching upward, consumers are also flocking to the Chevrolet Equinox crossover which is available with a six- or four-cylinder engine.

Johnson said fleet sales to businesses are propping up GM’s pickup sales. Johnson said retail sales of GM pickups fell 2 percent last month. He said, “While we do expect a continued softening in sales of full-sized pickups for personal use, the market for commercial and small-business use will continue to grow as the economy strengthens.”

Fleet sales also buoyed GM’s overall sales in April, accounting for 26 percent of all sales and representing a 31 percent increase from a year earlier. GM says April’s increase is in line with its full-year forecast for fleet sales.

As of the end of last month, GM had 577,000 units in its inventory, down from 573,900 on April 1. Johnson said, “At that level, we feel like we’re in pretty good shape heading into the summer months.”

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