GMC expects record Sierra pickup sales as it struggles to keep up with demand
GMC is on track to hit record sales of its Sierra heavy-duty and light-duty pickups this year despite continued thin inventory amid a global shortage of semiconductor chips.
The scarcity of chips, which are used in a variety of vehicle parts, has crippled auto industry production. But General Motors has managed to keep its truck plants running, for the most part, throughout the crisis.
"We've done very well. We believe we can still have an all-time sales record on the Sierra," Duncan Aldred, global vice president of Buick GMC, told reporters Tuesday. "When we get chips, we generally put them in Sierra and Yukons and we've managed quite well through that (chip shortage) this year. We expect an improvement next year."
By year-end, GM expects to restart its Oshawa Assembly plant in Ontario where it will assemble Sierra and Chevrolet Silverado pickups. GM currently builds the vehicles in three other plants in North America.
But Aldred warned that GMC dealers will still operate on a deliver-to-order basis for pickups because demand will outpace supply for a while.
Despite the chip challenges, Aldred said as of Tuesday more than half of GMC dealers have signed up to install electric-vehicle chargers and pay for other equipment needed to sell the 2022 GMC Hummer EV pickup that is on schedule to arrive to market by year-end.
At Sellers Buick GMC in Farmington, Mich., owner Sam Slaughter said his store is selling Sierra pickups at the fastest pace he's seen in recent history.
"We're selling every one we get and most of them are presold because people want to tag whatever Sierra they can get," Slaughter told the Detroit Free Press. "Most of them are AT4, Denali and Elevation, the higher-end trims."
The 2021 Sierra AT4 light-duty pickup starts at $54,700, the Denali at $55,800 and the Elevation at $43,100.
In the third quarter, GMC's sales of light-duty and heavy-duty Sierra pickups combined were down 22% to 52,774 compared with the year-ago quarter. But for the nine months ending in September, total Sierra sales were up almost 10% at 191,186 compared with the year-ago period.
For the full-year 2020, GMC sold 253,016 total Sierra pickups, a 9% gain over 2019, according to GM.
The next biggest seller in GMC's line is the Yukon, which had a 24% sales gain in the third quarter to 17,428. Through September, Yukon sales are up a whopping 55% to 59,743.
'Vehicle for all customers'
The chip shortage is, in part, a result of the COVID-19 pandemic when demand rose for personal electronics, which require the chips. Chip makers prioritized production to that industry over the less profitable chips that go into car parts.
GM and its cross-town rivals, Ford Motor Co. and Stellantis, each have had to pause production or build vehicles just short of the chips parts and then wait for the parts to arrive before completing the vehicles. Consulting firm AlixPartners in Southfield, Mich., has forecast that automakers will lose production of 7.7 million vehicles this year and it will cost the global auto industry $210 billion in revenues.
Most dealership lots are barren of new cars. Customers face long waits and higher prices. Still, Aldred said, GMC will not cut production of lower trim models — which are less profitable — to streamline production.
"I think we're through that phase, if you're on a plan to deliver an all-time sales year," Aldred said. "A core part of our mission is to provide a vehicle for all customers."
Aldred said he foresees chip availability improving next year helping boost production of a variety of trim levels.
GM builds its light-duty Sierra and Silverado pickups at Fort Wayne Assembly in Indiana and Silao Assembly Plant in Mexico. It builds the heavy-duty versions at Flint Assembly.
By year-end GM will fire-up Oshawa Assembly, but Aldred declined to provide how much more volume GMC will get from Oshawa.
"I won't put a number on it, but an extra plant capacity for heavy-duty and light-duty trucks is a huge benefit for both GMC and Chevy," Aldred said. "We're basically operating on no physical inventory of the heavy duty and light-duty Sierra right now and operating on a deliver-to-order model. But even with the additional capacity, we won't be able to build stock-on-the-ground for dealers."
That's because demand for pickups will outpace production.
Slaughter said customers have been patient, but he has likely lost some business to a rival dealer who had a vehicle in stock that he did not. Then again, he's probably won business from others for that same reason, he said.
"I don't know when we'll see more volume," said Slaughter, who also owns Sellers Subaru in Macomb Township, Mich. "At Subaru and GMC, we're literally hand-to-mouth every month selling everything we can."
Early Tuesday morning, a crew was busy installing more charging stations at Sellers Buick GMC store, which already has two chargers. The dealership will have five chargers in total along with a special lift for its service bay next month.
It's all in preparation to sell the 2022 Hummer EV and 2023 Hummer EV SUV when they arrive in two years.
"We have about half-a-dozen of the first edition Hummers coming in, but no firm dates," Slaughter said. "We're told sometime in the next two to three months. GM did a preorder, so they are already sold. We have orders in for the non-first edition, the regular Hummer, and a bunch of orders for the SUV coming in 2023."
Aldred said more than half of GMC's U.S. dealerships have signed up to sell Hummer EVs. Like Slaughter, they are in the process of upgrading their facilities to do so. GMC has assigned upgrades in phases based on the production ramp-up of the Hummer being built at Factory ZERO in Detroit and Hamtramck.
"Some dealers won't get their Hummer until sometime next year, for example, so no need for the dealer to spend the money to be ready for it now," Aldred said. "Everyone's absolutely on track and every dealer will be ready before they receive their Hummer."