While General Motors has recovered since its epic 2009 bankruptcy, and its passenger cars are better than they have ever been, the company remains dependent on sales of pickup trucks and SUVs for its profits.
That’s just the way it is. Detroit, GM included, does trucks and full-sized heavy duty SUVs better than any of the competition. And the all-new Chevy Silverado pickup has arrived just in time to impress journalists and Wall Street as GM tries to make stock-price run as the government unwinds the ownership stake it took in GM when taxpayers helped bail out the company four years ago.
Silverado was in development for seven years, a bit longer than is usually the case with a GM vehicle, but the bankruptcy fell right in the middle of the process. And while time was lost, company officials did not want to rush the truck or take a chance of getting anything wrong.
There is much gamesmanship among car companies about their new pickup trucks. And for symbolic reasons, we think, Chevy chose a ranch near San Antonio, Texas, to introduce the new Silverado, a short drive from a factory where Toyota builds the Tundra pickup. Toyota has been trying to crack the full-sized pickup market for two decades with only limited success. While the Tundra gets high marks from Consumer Reports and J.D. Power, it has only been a middling success with truck buyers who trend to be extremely loyal to Detroit brands Chevy, Ford and Chrysler’s Ram.
While Ford is the number-one selling truck, and number-one selling vehicle in the U.S., GM actually out-sells Ford if the sales of Chevy Silverado and GMC Sierra are combined.
There is an unmistakable connection between pickup trucks, the U.S. economy and the heartland of the country. As home-building goes in the U.S., so goes the U.S. economy and pickup sales. And as housing starts and home fix-ups are recovering, Detroit is racking up more profits from truck sales.
And so go pickup sales, so goes the financial health of GM. The company earns more than $10,000 of gross profit per truck. That means GM earns between $5 billion of gross profit from its truck business in a good year. GM needs the trucks to do well with the public to make up for the very small profit, or loss per car, it makes on small cars like the Chevy Sonic and Spark and Volt.
The least-expensive Silverado, which begins arriving at dealers in the next month, start at about $23,000, a base model that actually only about 15 percent of truck buyers will take.
More than 60 percent of buyers add lots of features to their trucks and will pay more than $40,000. Those are the folks that Chevy, and GMC, drool over.
For a deep-dive review of the all-new Chevy Silverado, check out Autoblog’s review from our resident truck expert Zach Bowman.
