Gas may be approaching $4-a-gallon nationwide but General Motors sees booming demand for its biggest pickups, the automaker set to run a key Michigan plant flat out in the coming months. But will sales continue to defy growing concerns about the economy? Headlight.News has more.
Duncan Aldred, GM’s new head of N. American operations, shown at the launch of the GMC Sierra HD.
With no end in sight for the Iran War and gas prices hovering near the $4-a-gallon mark for the first time since mid-2022, industry analysts fear auto sales could take a hit in the months ahead. Despite such concerns, General Motors says demand for its biggest pickups has been outstripping production.
The automaker confirmed it will increase operations at its heavy-duty truck plant in Flint, Michigan to six days a week starting in June. The automaker hasn’t indicated whether it also will ramp up operations at a second HD factory in Ontario – but trucks built in Canada would face import duties when brought into the United States.
GM’s apparent surge in demand comes counter to what at least one rival has reported, Ford earlier this month reporting a double-digit downturn in sales of all of its F-Series pickups. The industry will report March and first-quarter sales this week.
“Strategic adjustments”
In 2024 GM announced a $1 billion investment at its Flint truck plant.
The Flint plant is the oldest still-running auto assembly plant in North America, first opening in 1947. It produces heavy-duty versions of both the Chevrolet Silverado and GMC Sierra. About 4,200 hourly workers are employed in the facility. They will begin working six-day shifts starting in June.
GM hasn’t released official sales and production figures for the HD models, though the Wall Street Journal quotes an official from the United Auto Workers Union who said output is typically about 1,100 trucks a day.
“General Motors is making strategic adjustments to Flint Assembly’s production schedule to align with strong customer demand,” according to a GM spokesman.
Tariffs playing a role
Pres. Trump meeting with senior leaders of the U.S. auto industry last December.
Without hard numbers it’s difficult to make a clear assessment of GM’s strategic shift but it’s clear that sales aren’t the only factor it considered. The automaker has also had to take into account the impact of tariffs on vehicles imported from Canada.
Boh light and heavy-duty versions of the Silverado and Sierra are currently assembled in the GM plant in Oshawa, Ontario. GM has been emphasizing production at Flint since Pres. Trump announced auto tariffs last year. Those duties were not impacted by a Supreme Court decision declaring broader tariffs illegal.
Pickups, in general, and heavy-duty models, in particular, generate some of the industry’s highest returns. But, with prices running anywhere from $50,000 to more than $100,000 for the 2500 GMC Sierra AT4X, tariffs of 25% on Canadian-made vehicles quickly decimate profit margins.
More Auto News
- GM Starts Testing “Hands-Free/Eyes-Off” Autonomous Driving Technology
- February Auto Sales Signal Weakness Ahead
- Ford v Slate: Who Will Win the Battle Among Upcoming “Affordable” Pickups
Defying gravity
Later this week, GM will offer more insight into the demand it’s been seeing for the HD line. It’s one of several manufacturers who now release sales numbers only once a quarter. That list includes Stellantis and its Ram brand which also produces HD pickups.
GM’s apparent surge runs counter to what Ford has been experiencing, however. In February the second-largest Detroit automaker experienced a 13.92% downturn in its overall F-Series line-up. The best-selling truck family in the U.S. includes everything from the mainstream F-150 to the F-750 commercial truck with a gross weight exceeding 37,000 pounds.
HD models like the Chevy Silverado are largely bought by commercial users, including construction companies. But they’ve also gained popularity among retail buyers, especially those who have heavy towing needs for things like boat and horse trailers.
Uncertainties ahead
The question is whether demand will remain strong. The surge in fuel prices has raised concerns that the U.S. automotive market could start to take a hit if the Iran War drags on.
Currently, Cox Automotive is holding to its earlier forecast for the overall market at 15.8 million this year, though senior analyst Erin Keating told Headlight.News that could slide if a fuel price surge drags on and if the economy then takes a major hit. For his part, Telemetry Research lead analyst Sam Abuelsamid warned overall demand could drop to 15 million – or less – if the broader economy continues to weaken.
HD sales are often a canary-in-the-coal-mine bellwether as contractors and other users often rein in vehicle purchases when they see signs of a cutback in consumer spending.
0 Comments