Here’s a headline for anyone who wants to see cars and trucks become more fuel efficient with fewer emissions. In the General Motors annual report, the company announced “our profitability is dependent upon the success of full-size pickup trucks and SUVs.” The General is fired up financially because sales of its mammoth Chevrolet Suburban SUV were up a stunning 86% in October. Sales of the slightly less portly Tahoe were up 81%, while the Yukon XL climbed 27%.
In the premium “in your face large luxobarge” category, sales of the Cadillac Escalade rose 9.2% while sales of Ford’s Expedition and Navigator fell. According to the Automotive News Data Center, sales of full size SUVs in general were up 4.9% overall. As a result, General Motors claimed 45% of the large SUV market in October, which must have Mary Barra and her merry minions dancing in the boardroom.
A GM spokesman said the large increase was due to more sales to commercial fleets and government buyers, which typically bring higher margins than rental company business. What? Avis and Hertz can buy cars for less than the government that bailed GM out just a few years ago? How’s that for “your tax dollars at work,” people? Fleet sales were only part of the story, though. Retail sales of large SUV vehicles rose 33% and accounted for 68% of their total volume.
These large vehicles are enormously profitable for manufacturers. The profit margins on a large SUV can top 20%, according to Morgan Stanley analyst Adam Jonas. The average transaction price in October for a Chevrolet or GMC full size SUV was $56,630, according to GM. That figure is down from $59,100 last year at this time because dealers are discounting 2016 vehicles to make room for the 2017 models.