GM June sales fall as inventories rise

on Jul5

Chevy sales fell 6.4 percent overall. The new Bolt EV, pictured, accounted for 1,642 deliveries.

DETROIT — General Motors’ inventory rose to its highest level in a decade after its U.S. sales fell 4.7 percent in June.

GM said it had 980,454 vehicles in stock as of June 30, which is equal to a 105-day supply. On a total-unit basis, that’s the most since June 2007, according to the Automotive News Data Center.

GM has said it purposely built up inventory in preparation for downtime at several plants later this year to retool for new models. But company officials had said as recently as a month ago that supplies would begin falling in the second quarter and be down to about 90 days’ worth at the end of June.

Nonetheless, a GM spokesman, Jim Cain, said the company remains on track to meet its year-end goal of having about a 70-day supply.

“This should be the peak,” Cain said. “We’ll have launch-related downtime as well as strategic reductions in passenger car production. We feel really good about our opportunity in the second half of the year.”

Weakening industry sales have made it tougher for GM to thin out dealer lots. The company already has cut or announced that it would cut more than 5,000 U.S. hourly jobs as it pares back output in response to slowing demand for cars. It also is extending the usual summer shutdown at some plants to reduce production.

What it’s trying to avoid is big, profit-killing discounts to keep dealerships from overflowing as the market slows. Cain said GM’s incentive spending rose slightly from a year ago but that the deals amounted to a smaller percentage of transaction prices in the second quarter than the first.

For July, GM is dropping the “bonus tag” discounts at its Buick and GMC brands, a month after it ended the deals at Chevrolet. Dealers have complained that the tag sales, which started last summer, confuse customers and create big price differences from one store to another on seemingly identical vehicles.

Cain said Buick and GMC will follow Chevy by offering more straightforward incentives that apply to a certain vehicle or trim level, for example. The bonus tags applied to only the individual vehicles that a dealership selected each month.

“We had a pretty good response at dealers to the simplified incentives,” Cain said. “We saw a pretty nice increase in retail segment share going from May to June in vehicles like the Silverado.”

Silverado sales rose 1.7 percent from June 2016, enough to surpass Fiat Chrysler’s Ram pickup for the first time since February.

Overall, GM’s retail sales fell 3 percent in June. The only brand to post a total or retail sales gain was Buick. Chevy sales fell 6.4 percent overall and 1.5 percent at retail. GMC retail sales declined 9.5 percent, while Cadillac’s dropped 12 percent.

Sales of the Chevy Equinox jumped 49 percent, mostly as a result of deals on the outgoing model. Chevy sold 29,182 units of the Equinox, surpassing the Cruze, Malibu and Impala combined as all three of those cars posted declines of more than 30 percent.

At Buick, sales of the Envision compact crossover more than tripled, making it the brand’s second-best seller for the month.

GM’s fleet sales declined 21 percent in June, including a 54 percent cutback in deliveries to rental-car companies. Sales to commercial buyers rose 36 percent.

“U.S. total sales are moderating due to an industry-wide pull-back in daily rental sales, but key U.S. economic fundamentals clearly remain positive,” Mustafa Mohatarem, GM’s chief economist, said in a statement. “Under the current economic conditions, we anticipate U.S. retail vehicle sales will remain strong for the foreseeable future.”

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