People kept buying Chevys, Buicks, GMC trucks and Cadillacs during the autoworkers’ 40-day strike last quarter. But GM didn’t walk away unscathed: it sold 25% fewer vehicles to dealerships in the last three months of the year.
GM makes its money when it sells cars to dealers, which are independent companies, not when the dealers sell to consumers.
GM (GM) announced Friday that its deliveries to dealerships fell predominately because of the strike by members of the United Auto Workers union. That strike halted production at GM (GM)’s US factories from September 16 to October 25.
But sales by those dealerships to customer actually increased 6.3% in the quarter. That’s because GM stockpiled inventory at dealerships ahead of the work stoppage.
The company had said it had increased the inventories at dealerships ahead of the strike. Still the company has warned investors that the strike will end up reducing its profits by about $2.9 billion when all the accounting is done.
The company did not give precise dealer inventory numbers ahead the strike or at the end, but they conceded the the strike depleted supplies at dealerships.
“Our US dealerships finished the third quarter with a healthy level of inventory,” CEO Mary Barra told investors in late October soon after the strike ended. “As the strike continued … with no additional vehicles in the pipeline for many weeks, our dealer inventories will be temporarily leaner than we’d like. The team is doing everything in its power to restore our supply of vehicles back to normal levels.” But there were limits to how much overtime could be scheduled at the plants to rebuild supplies.
Much of the drop in shipments to dealers in the quarter came from lower shipments of the new full-size pickups, GM’s key product. But sales to customers held up well in the quarter, with the Chevrolet Silverado and GMC Sierra posting a 20% increase in sales in the quarter compared to a year ago.
“We didn’t really see a significant inventory problem for GM throughout the quarter,” said Michelle Krebs, senior analyst for Cox Automotive.
She said there were mostly shortages of the full-size SUVs, like the Chevy Suburban and Tahoe. GM is about to roll out a new version of that SUV, which made building up the inventory before the start of the strike more difficult. Those two models’ sales fell 13%.
“Overall GM sales [to consumers] were better than we had been expecting,” she said.
Correction: An earlier version of this story incorrectly stated GM's sales to consumers.