This past spring General Motors introduced redesigned versions of its Chevrolet Silverado and GMC Sierra full size trucks in order to stay competitive in the ultra-hot pickup market. Having been last redesigned for the 2007 model year, each new entry was a bit overdue but extremely vital for GM to remain competitive in a segment with much fresher designs from Ford and Ram.When GM first rolled out each new model, they carried very attractive sticker prices; but recently GM started playing numbers games which raised the average MSRP on both models by about $2,000. To put this lift in perspective, when first introduced the 2014 Chevrolet Silverado 1500 4WD Crew Cab LT carried a sticker price of $37,840; today the same truck costs $39,825, a 5.3% jump in price.
The rise in the Silverado’s MSRP makes it about $1,600 more than a comparably equipped F-150 and nearly $1,800 more than the Ram, and while it’s a totally new design with more features, it’s certainly debatable if increasing the price gap between the competition is warranted or not. It’s not surprising that GM would tweak pricing eventually, although this does seem like a strange tactic to increase sales and a bit early in the game to make a 5.3% adjustment.
Don’t worry, though, because there’s more to the story: GM has also began juicing incentives for each model, meaning the increases in MSRPs serve mostly as marketing ploys to come closer to the higher discounts being offered by Ford and Ram on outgoing 2013 models but without sacrificing margin. Looking at the past three month’s incentive spending for the 2014 Silverado shows that there has been a gradual walkup in offers.
This past August, Autodata data shows that Chevrolet spent an average of $1,782 in dealer and customer cash incentives on the 2014 Silverado; this figure crept to $2,355 in September and jumped to $3,135 in October. As for the competition, 2014 Ram dealer and customer cash incentives totaled $2,437 in October, while 2014 F Series cash offers were the thriftiest of the group at $1,586. The figures for 2013 model Ram and F Series pickups were much higher, at $4,470 and $3,963, respectively.
Looking at October sales totals, Chevrolet managed to grow Silverado sales by 31.3% while GMC Sierra sales also increased, but by a smaller yet still impressive 22.8%. It looks like GM’s marketing ploy might be working because during this same period, Ram sales only grew by 5.9% and F-Series deliveries increased by a slightly smaller 5.5%.
For the large pickup segment, November will be an interesting month to watch because it will be the first full sales period of increased sticker priced units of the Silverado and Sierra. Will GM be able to continue to grow sales at double digit rates? Will incentives continue to jump as well? It’s still too early to tell, but the full size truck segment may be in the early stages of a full-fledged incentive battle.