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GM profits threatened by glut of pickups

Automotive News reports that General Motors may slash production or ramp up discounts in order to deal with an oversupply of pickup trucks. GM currently has more than double the standard supply of pickups, and the vehicles are threatening to dampen the automaker's profits for 2013. Typically, automakers try to sustain a 60- to 75-day supply of vehicles, but GM is currently loaded with a 139-day supply, as of last month. At the end of November, the automaker was sitting on 245,853 units.
The manufacturer says that it will adjust production accordingly before laying any incentives on the profitable pickups. Even so, there's some concern that the inventory swell could hurt the roll-out of the next-generation Chevrolet Silverado and GMC Sierra. GM actually began slowly stepping back production in August, but it's clear the company will take further action as it heads toward the end of the year and into the next. Analysts predict the automaker could reduce pickup manufacturing by nearly half in the first quarter of 2013.
That still may not be enough to keep GM from laying extra cash on the Silverado and GMC Sierra. While the company's incentive spending was down in November compared to the same month in 2011, both the Ram 1500 and Ford F-150 saw double-digit percentage increases in sales last month while the Silverado and Sierra numbers slid compared to a year prior. Incentive spending could help move more trucks and add some balance to the GM inventory surge.

There's an impending shortage of new trucks in America's heartland

URBANDALE, Iowa — Jerry Bill is worried the novel coronavirus could hurt business at the Des Moines auto dealership he runs, but not because of a shortage of buyers for the big Ram pickups on his lot. "Our biggest issue will be if we don't get more inventory," said Bill, general sales manager of Stew Hansen Chrysler Dodge Jeep Ram, which sells around 2,700 new vehicles a year in Urbandale, a suburb of Iowa's capital Des Moines. After a drop in sales in April when consumers stayed home, Bill expects pickup truck sales to end May similar to where they were a year earlier. And if demand remains strong, Bill said he will run out of popular models in June. Fiat Chrysler began slowly restarting Ram truck assembly lines on Monday after a two-month shutdown. The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession of 2007-2009 because of lockdown measures aimed at slowing the spread of the coronavirus. Economists warn the second quarter will be much worse. Still, far from the lockdowns of states like New York, Michigan or Ohio, dealerships like Stew Hansen have provided FCA and Detroit rivals General Motors and Ford a rare bright spot: strong sales of pickup trucks in America's heartland. Overall U.S. sales of cars and light trucks crashed to the weakest pace in 50 years last month. But sales of big Detroit brand pickups, particularly in southern and western states less affected by the outbreak, significantly outperformed the market, industry executives and analysts said. Pickup trucks are one of the most profitable automotive segments in the world. They account for a huge portion of the Detroit automakers' profits and formed a huge lure for Peugeot, which expects to merge with FCA by early 2021. The pressure is now on to boost pickup truck production and send vehicles to dealers in parts of the country with dwindling supplies. That is particularly true for GM, which is running short of certain truck models after losing 40 days of production to a strike last fall. "If you don't have what someone wants, they can choose to go to another brand," said Cox Automotive analyst Michelle Krebs. 'Easiest swap ever' Detroit automakers in March rolled out large discounts — such as interest-free loans for seven years — to keep vehicles rolling off dealer lots.

Chevy Volt replacement battery cost varies wildly, up to $34,000

There's a growing hubbub in the plug-in vehicle community over what looks like some ridiculously cheap replacement batteries for the Chevrolet Volt going up for sale. GM Parts Online, for example, is selling a replacement Volt battery with an MSRP of $2,994.64 but, with an online discount, the price comes down to $2,305.88. For the 16-kWh pack in the 2012 Volt, that comes to a very low $144.11 per kilowatt hour (kWH). But is it a real deal? How can it be, when a Chevy dealer may quote you a price of up to $34,000 to replace the pack? For a 16-kWh Volt pack, $2,305.88 comes to a very low $144.11 per kWh. But is it a real deal? Battery packs in alternative propulsion vehicles are usually priced by the kWh and, historically, they've been thought to be in the range of $500-per-kWh for OEM offerings. Since automakers are understandably secretive about their costs, we still don't know what the real number is today, but we do know it varies by automaker. Tesla, for example, has said it pays less than $200-per-kWH at the cell level but, of course, a constructed pack would be more. Whatever is going on, li-ion battery prices are trending downward. So, $144.11 certainly sounds great, but what's the story here? Kevin Kelly, manager of electrification technology communications for General Motors, reminded AutoblogGreen that GM Parts Online is not the official GM parts website and that, "the costs indicated on the site are not what we would charge our dealers or owners for a replacement battery. There would be no cost to the Volt owner if their battery needs replacement or repair while the battery is under the eight year/100,000 mile limited warranty coverage provided by Chevrolet." A single price tag also can't be accurate for everyone, Kelly said. "If the customer needs to have their battery repaired beyond the warranty, the cost to them would vary depending on what needs to be replaced or repaired (i.e. number of modules, which specific internal components need replacement, etc.)." he said. "So, it's hard for us to tell you exactly what the cost would be to the customer because it varies depending on what might need to be repaired/replaced. As a result, the core charge would vary." But, is the $2,300 price even accurate for anyone? Thanks to a reader comment, we see that this similar item on New GM Parts makes it look like the lithium-ion modules that Kelly mentioned – where a lot of the expensive bits are – are not included.