Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

General Motors Company (NYSE:GM)

December 2012 U.S. Vehicle Sales Conference Call

January 3, 2013 11:00 AM ET

Executives

Jim Cain – Manager, Financial Communications

Kurt McNeil – VP, U.S. Sales Operations

Mark Reuss – VP; President, North America

Don Johnson – VP, Chevrolet Sales and Service

Mustafa Mohatarem – Chief Economist

Chase Hawkins – VP, Cadillac Sales and Service

Analysts

John Murphy – Bank of America Merrill Lynch

Chris Ceraso – Credit Suisse

Brian Johnson – Barclays Capital

Rod Lache – Deutsche Bank

Pat Archambault – Goldman Sachs

Adam Jonas – Morgan Stanley

Colin Langan – UBS Securities

Tom Krisher – The Associated Press

Jeff Bennett – Wall Street Journal

Tim Higgins – Bloomberg

Brent Snavely – Detroit Free Press

Melissa Burden – Detroit News

Operator

Ladies and gentlemen, thank you for standing by and welcome to the General Motors Company December 2012 U.S. Sales Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded today, Thursday, January 3, 2013.

Your speakers for today are Kurt McNeil and Jim Cain. I would now like to turn the conference over to Mr. Jim Cain, GM Communications. Please go ahead, sir.

Jim Cain

Hi, good morning, everyone and Happy New Year. Welcome to the GM December sales call. We’ll keep going in just a second. As always, Kurt McNeil, our Vice President of U.S. Sales Operations, will lead the discussion. We’ll have Q&A with a group of executives from our different brands, and also joining us this month is Mark Reuss, President of GM North America.

One final comment before we get going. The discussion here is covered by our disclosure on forward-looking statements that you can read in the press release. And with that, Kurt, the floor is yours.

Kurt McNeil

Thank you, Jim. Good morning and thank you for joining us everyone. Sincere Happy New Year to everyone on the call. As you’ve seen from the press release we issued about an hour ago, GM is reporting its highest December sales in five years with deliveries reaching 245,733 units. That’s up 5% versus a very strong December of 2011, a month that had actually one more additional selling day.

December 2012 also marked our best month of the year from a retail sales standpoint. In fact, Chevrolet, Cadillac and Buick posted higher retail sales and all four of our brands posted higher total sales last month compared with the year ago.

Our full-size pickup trucks sold exceptionally well. We sold more full-size pickups in December than in any month since September of 2008, and this gave us truck leadership for the month. We likely achieved our highest full-size pickup truck share of the year with year-over-year sales of the Chevrolet Silverado up 6% and sales of the GMC Sierra up 13%.

We also had our best month for compact crossovers, which underscores the strength of the Chevrolet Equinox and GMC Terrain month-in and month-out. Cadillac continues to build momentum. December was the brand’s seventh consecutive month of retail sales growth.

Our fleet business performed very well. I’ll focus on the full-year result because they really show our balanced approach to this important part of the business. Our fleet mix for the month was 21%, and for the year it was 26%, which is exactly on plan.

Annual volume was up 5%. We also passed a very important fuel economy milestone. In 2012, GM delivered more than 1 million cars and crossovers in the United States that achieved at least 30 miles per gallon on the EPA highway test cycle. No domestic automaker has ever done this because only GM has created so many products in segments that were once dominated by Asian brands including mini cars, small cars and compacts.

You can really see the impact in the fourth quarter. Our combined sales in these particular segments were up 72% year-over-year in October, 51% in November and 52% in the month of December. On a nameplate basis, the Chevrolet Spark and Sonic continue to sell very well. December also marked the second best month for the new Buick Verano and we saw a 27% sales increase for the Chevrolet Cruze and a 72% increase for the Chevrolet Volt.

These products give us a great foundation for the future, both from a sales and a technology standpoint. And we’re going to keep investing in these new products and advanced technology to exceed the increasingly high expectations of our customers. In fact, in 2013, GM will introduce a new 2.0-liter clean diesel Chevrolet Cruze and all-new Chevrolet Impala powered by eAssist and a stunning Cadillac ELR plug-in.

We will also expand the availability of turbocharged four-cylinder engines with vehicles like the unique Buick Encore small crossover, which achieves 33 miles per gallon on the highway. Taken as a whole, we believe, GM will offer the most technologically advanced and diverse range of cars and crossovers in the industry this year.

Another major story for GM is the velocity that we achieved and sustained throughout the month. Let me share a few headline numbers and you’ll see what I mean.

In the month of December, we increased our retail sales 38% from November, which is more than double the industry’s gain. Our strength was across the board, retail car sales increased 24% from November, retail truck sales increased 60% and retail crossover sales increased 28%. One of our best performing cars in December was the Chevrolet Malibu, which posted a 32% retail sales increase from November. That marks the second consecutive monthly retail sales increase for the car. The Buick Enclave also had an outstanding month. Retail sales were up 26% from November for the vehicle’s best month ever. That helped propel Buick to its third consecutive year of retail sales gains.

Importantly, we delivered these results with competitive incentives. According to the latest J.D. Power PIN estimates, our average per unit spending increased about $100 from a year ago. But that was certainly enough to level the playing field with our competitors and sharply accelerate our sales without losing pricing discipline.

Our ATPs, our average transactions prices were up about $200 per unit compared with November, according to PIN, and almost $500 compared with last December. Our strong finish in 2012 also brought our yearend stocks closer to the ranges that we shared last year. Our inventories are detailed in our press release.

Now, heading in to the New Year, we’re very comfortable with our go-to-market strategy. Indeed, we’re very optimistic about our competitive position and the strength of the industry as we move into 2013. We are especially pleased that the politicians on both sides of the aisle in Washington were able to reach a compromise on particular issues. They clearly have a lot of work to do, but the short term crisis has passed, and that clears the runway for a full year light vehicle sales to rise to the 15 million to 15.5 million unit range in 2013. That will make 2013 the industry’s best year since before the great recession, and we are prepared to make it a standout year for General Motors.

All right, let’s move to question and answers. In addition to Mark Reuss, joining us are Alan Batey, Vice President of U.S. Sales and Service and Interim Chief Marketing Officer; Don Johnson, Vice President of Chevrolet Sales and Service; Brian Sweeney, Vice President of Buick and GMC Sales and Service; Chase Hawkins, Vice President of Cadillac Sales and Service; Ed Peper, Vice President of Fleet and Commercial Sales; and our Chief Economist, Mustafa.

Okay, let’s take some questions. Operator?

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now proceed with the analysis portion of the question-and-answer session. (Operator Instructions) Our first question is coming from the line of John Murphy with Bank of America Merrill Lynch. Please proceed with your question.

John Murphy – Bank of America Merrill Lynch

Good morning, guys. Happy New Year.

Kurt McNeil

Happy New Year, John.

John Murphy – Bank of America Merrill Lynch

Just a question on the pickup trucks here. You made good progress on the inventory reduction and I’m trying to figure out the balance between production cuts versus the sales push and a change in inventory here. And if I run the math, you had about 246,000 trucks at the end of November, pickup trucks, you sold almost 70,000 in a month. So that means, you probably produced about 45,000 in December. So that would indicate that your production was down a little bit year-over-year. That’s the first month in a while that that production was down in those trucks. So it seems like you’re actually shifting your strategy towards production restrain or cuts to work down that inventory, but we’re also seeing a little bit of step up in sales push here in incentives, in December.

So I’m just trying to understand the next couple of months, if we’ll see this kind of continued shift towards a little bit more production cut with a little bit of sales push and we’ll see sort of a more balanced approach as we get into January and February, and hopefully these inventories get really close to what your target is. So, I’m just trying to understand the balance between the production cuts versus incentive activity going forward.

Kurt McNeil

Well, John, we always said that we would use all the levers at our disposal. We did not have – typically December, we don’t – because of the Christmas and the holiday shutdown, we don’t have as much production obviously. We feel that we’re very much on plan for what we’ve communicated in trying to be transparent. So, did we tweak production? Yes. We told you we would at times, tweak production. We do not see any type of significant production changes going forward on full-size pickups. We will continue to be competitive from an incentive standpoint. And we like where we are and we think we’re very much on plan for what we’ve communicated.

John Murphy – Bank of America Merrill Lynch

And just one clarification, when you talk about competitive on incentives, I mean if you benchmark your pickup truck incentives versus the industry average, where do you stack up on the incentive and then also maybe on the average transaction price? If you can share that kind of data – ballpark with us?

Kurt McNeil

Well, it’s interesting. Our incentives are roughly the same place they were a year ago. And our average transaction prices are up between $1,600 and $1,800. So we feel we’re in a pretty good place, and there’s certainly other competitors that are spending much more than we are on that full-size pickup segment.

John Murphy – Bank of America Merrill Lynch

Got you. That’s incredibly helpful. Just one last question. Mark, with you on the line, you guys are talking about turbos in your cars quite a bit, but you haven’t enacted that strategy on your pickup trucks. Just curious, what the delta is, maybe just from an engineering standpoint or marketing standpoint that makes you think they’re a good solution for engine efficiency on cars but not on trucks.

Mark Reuss

Well, that’s a huge leap of assumption on what you just said the last part of that, which is that they’re good – they’re good for cars but not trucks. We have to look at the engine families that are available and we have to look at real world fuel economy, the way trucks were used, and we have look at how long you are in the duty cycle for any given displacement and how much boost you’re really running on a constant basis.

We just started a campaign on Chevrolet trucks, if you saw it here over the last week where we have the lowest cost of total ownership that includes operating costs. And so inside of that is maintenance, inside of that is real-world fuel economy, inside of that is all of that. And so for now, the beginning strategy on our new pickup trucks will launch with our new Gen 5 engines in all forms both V6 and V8 and stay tuned for how we deploy different strategies with different fuel economy strategies around Gen 5 engines both V6 and V8. And I’m not going to tell you any more than that just from a competitive standpoint.

John Murphy – Bank of America Merrill Lynch

But from an engineering standpoint, it sounds like those engines – the Gen 5 might actually be appropriate depending on the duty cycle for a turbo charger.

Mark Reuss

I’m not going to disclose whether it is or isn’t at this point.

John Murphy – Bank of America Merrill Lynch

Okay, thank you very much.

Mark Reuss

I’m sorry about that, I just – it’s very competitive.

Kurt McNeil

Thank you, John.

John Murphy – Bank of America Merrill Lynch

Okay, we’ll talk to engineers. Thank you.

Mark Reuss

I’m an engineer.

John Murphy – Bank of America Merrill Lynch

Other engineers, I apologize. I didn’t – I understand that, sorry. With some other engineers.

Operator

Our next question comes from Chris Ceraso with Credit Suisse. Please go ahead.

Chris Ceraso – Credit Suisse

Thanks. Good morning. I also wanted to take an opportunity while we Mark on the line to ask a question about the trucks. I thought it was somewhat conspicuously absent from the commentary when you launched the truck Mark. And then also today, in Kurt’s commentary about some of the powertrain advancements that you’re making that you didn’t talk about, the gains that you expect to achieve in fuel economy with the new truck. When should we expect to get those numbers? And why was that left out at the launch?

Mark Reuss

It was left out at the launch because we’re not done certifying. Very simple. So we can’t talk about it until we’re done and we’re not going to get into – we’re going to be very, very, as we always are, accurate and transparent with the fuel economy that we advertise in the fuel economy that our customers get. And so until we’re ready to do that we’re just not going to talk about it quite yet. We’re not hiding anything, we’re just – we’re not done. So we’ll try to get it done.

Chris Ceraso – Credit Suisse

It sounds like you’re pushing the emphasis towards the sort of real-life fuel economy as opposed to the EPA. Is that going to be part of the messaging when you do print the numbers?

Mark Reuss

I think they’re one and the same typically and that’s industry standard. So that’s really all I have to say about that. But we typically are well-matched so.

Chris Ceraso – Credit Suisse

Okay. And then just a couple of housekeeping items. You mentioned the retail change sequentially which I don’t think is quite that meaningful. Can you give us the number on a year-over-year basis in terms of the retail change and the fleet change for the month of December?

Jim Cain

Well we did, but we’re going to do it again.

Kurt McNeil

Sure. If I understand your question correctly the total sales were up 4.9%, 5%, the retail was up 2%.

Chris Ceraso – Credit Suisse

And fleet?

Kurt McNeil

Fleet was up 19%.

Chris Ceraso – Credit Suisse

19%. Okay. And then just lastly do you have an estimate of the benefit? Or how many units you saw that were replacement units in the northeast from the storm a couple of months ago?

Kurt McNeil

Yeah, not – we didn’t see a lot attributable to Sandy recovery.

Chris Ceraso – Credit Suisse

Okay. Thank you.

Kurt McNeil

Thank you, Chris.

Operator

Our next question is coming from the line of Brian Johnson with Barclays Capital. Please go ahead.

Brian Johnson – Barclays Capital

Good morning. Yeah, as an engineer, I’ll ask Mark a question again. Is it fair to say that with the new engines having GDI that that’s a foundation for turbocharging at some potential later date?

Mark Reuss

Sir, you can always do that, absolutely.

Brian Johnson – Barclays Capital

And I guess another question, just kind of broadly. Colorado was way off. You’ve talked about the fuel economy benefits of going there. Your truck is doing quite well in Brazil, for example. Couple of questions, one, updates on timing of bringing that in to you to further push the fuel economy point.

And then, two, admittedly the EcoBoost doesn’t get much in terms of mpg. It’s about 1 mpg but it has a diesel-like torque curve. So how do you kind of market against that before you do or do not get a turbocharged option out there, because it’s a different consumer attribute, the torque curve versus the mpg?

Mark Reuss

Yes. We’ve talked about this a couple of different ways. I’ll try and frame it this way. After we’re done with our full-size trucks and SUVs, we’ll move into the launch of the Colorado and Canyon. So you can kind of think about what that timing is. And from a powertrain standpoint, we showed you the beginning of the powertrains and our full-size trucks more to come. There’s a whole story that will begin to evolve for General Motors, in both GMC and Chevrolet both on the full-size and the mid-size pickup trucks. And we will have a much bigger bandwidth and competitive arsenal of powertrains, fuel economy and choices for the customer and I’ll just leave it at that.

Brian Johnson – Barclays Capital

Okay, thanks.

Mark Reuss

Yes.

Kurt McNeil

Thanks Brian.

Operator

Our next question is coming from the line of Rod Lache with Deutsche Bank. Please go ahead.

Rod Lache – Deutsche Bank

Happy New Year everybody.

Kurt McNeil

Rod.

Rod Lache – Deutsche Bank

I was hoping you could just talk about this expectation of 15 million to 15.5 million that you’ve commented on for 2013? Within that, what’s your view on what the pickup truck market will represent? How big a driver of the growth do you reckon that’s going to be and can you share any thoughts on other assumptions like what you’re expecting for job growth in 2013, underlying that forecast?

Mark Reuss

We’re expecting a fairly steady continuation of the momentum we’ve seen in both economy and in vehicle sales. With the housing recovery now underway, that’s generally good news for pickup trucks, so we do expect a fairly strong performance from the pickup truck side. Vehicle sales, pretty much are trending along as we have projected. Fourth quarter is coming in very strong, in fact above where we projected earlier in the year. So, both the economy and the industry have a bit underlying momentum that we expect to continue and as Kurt mentioned, with the fiscal cliff concern somewhat out of the way, I think we’ll see people beginning to make more decisions knowing what the tax status is. That was a big concern going into the year, and that’s now been more or less resolved. So, pretty confident about the underlying path of both the economic recovery and auto sales.

Rod Lache – Deutsche Bank

Do you have a view on what percentage of the market trucks – yes, they’re obviously running well below where they were a couple of years ago, but where does that kind of migrate up to given this assumption for growth and housing?

Mark Reuss

I think we’ll see some improvement in the truck market share especially with oil prices and gasoline fairly stable right now. But I don’t think we – I want to get too fine tuning on that one.

Rod Lache – Deutsche Bank

Okay. All right, thank you.

Kurt McNeil

Thanks, Rod.

Operator

Our next question is coming from the line of Patrick Archambault with Goldman Sachs. Please go ahead.

Pat Archambault – Goldman Sachs

Yes, thank you very much. Good morning, another truck question from my end. From my understanding is the launch for the K2xx is fairly staggered. I guess one of – or the first of four facilities I think beginning in April, if I’m not mistaken, although I think the SUVs perhaps maybe even into 2014. But can you just give us a view as to how constrained you expect to be in that initial ramp up for the new K2xx product, just given sort of the staggered launch. And then sort of simultaneously, how you would plan to manage some of the heritage model inventory because clearly, there’s a bit of a balancing act, you want people to be able to buy the truck, but you want them to buy the more expensive ones, so there’s kind of a fine line to be drawn there. So how are you guys thinking about that for this coming year?

Kurt McNeil

Well, I guess we’re not going to give you – be able to give you a lot of detail on all of the elements of the launch. However, we will say that we’ve been as transparent as possible on production, marketing and incentives on the 900 trucks and we’ve given you some inventory ranges and we would feel that we’re very much on plan.

So, we’re going to continue to be competitive because we’ve seen our competition be extremely competitive in some cases. So we’re going to continue to be competitive and right now, we feel that we got the right amount of inventory to sell versus the competition, take advantage of the growth that we’re talking about this 15 million to 15.5 million. So we feel we’re in a pretty good place both from the cadence of the rollout of the new truck versus what we have in inventory and producing of the old truck.

Pat Archambault – Goldman Sachs

Okay. And if I can shift gears a little bit, I mean, you gave some helpful disclosure in terms of your pick up as well as all-vehicle inventory. Are you also feeling fairly well-positioned in terms of the non-pickup vehicle stock? Are there sort of pockets where you sort of need to still trim or how you’re just feeling about that overall non-truck inventory level at this stage?

Kurt McNeil

We feel good. We feel good especially going into a year where we see steady incremental growth. We feel good where our inventory levels are.

Pat Archambault – Goldman Sachs

Okay, great. Thank you very much.

Operator

Our next question is coming from the line of Adam Jonas with Morgan Stanley. Please go ahead.

Adam Jonas – Morgan Stanley

Thanks. Happy New Year, engineers, financial engineers, sales engineers and like. Question on average transaction prices for trucks. I might have missed this earlier on the commentary, guys, but can you tell us what ATP for your pickups were from November to December?

Kurt McNeil

Yes. I’m working on it here.

Adam Jonas – Morgan Stanley

I’ll let you work on that and I’ll go to next one, if that’s all right. Mark, would it be a reasonable assumption that given that the changeover and of course filling that 250,000 or so unit dealer stock pipeline that if there is a housing bull case, which obviously would be great for pricing and clearing out inventory and that would certainly wouldn’t be negative for the change overall. But if there was a housing bull case that lifted the whole segment of pickup truck significantly next year, that maybe due to the changeover that GM could lose a bit of share for good reasons because of the capacity constraints and dealer to fill up. Is that reasonable?

Mark Reuss

I mean, hey, Adam, a couple of months ago, we sort of said, we ended the year at 220-ish. We’d been in really good shape for the next year to be able to supply it and we’re within 1,000 units of that which is I don’t think you can shoot that straight. So, we’re pretty much right where we want to be for the changeover, and our changeover is going right now extremely well. So we’re bringing our new Gen 5s online right now engine-wise and we’re bringing our stamping facilities online right now.

So, I don’t foresee a shortage on a share basis here to be honest with you, because we’ve got operational flexibility in each plant prior to the changeover of those plants as well, so we trimmed a little bit of overtime, as you could probably see, and we can add it back in. We can do lots of things here real quickly. So, I feel pretty good about it.

Adam Jonas – Morgan Stanley

All right. And just to kind of confirm a number that kind of seem to come out of the truck launch event in Detroit and maybe it wasn’t accurate, but is it correct that maybe of the total pickup truck units produced in 2013 that 40% would be the 2014 versions, the new truck, whereas the majority would be still the old outgoing 2013 version? Does that proportion sound roughly accurate 40/60 new to old?

Kurt McNeil

No, I don’t know where that came out of. I know it wasn’t written on any scripts anywhere. So, no, I don’t think so.

Adam Jonas – Morgan Stanley

So, you don’t – you think that’s – it would be more balanced?

Kurt McNeil

I think it will be more balanced.

Adam Jonas – Morgan Stanley

Okay. Thank you.

Don Johnson

Hi, Adam, it’s Don Johnson with Chevrolet. Just to address your question that you asked first on ATPs. Clearly, as we got into December, ATPs on Silverado were down, December versus November, by anywhere between $800 and $900. But I think the more important data point is that we ended up the month basically being right on our year-to-date ATP number. When you look at our year-to-date ATP number for 2012, we’re actually between $1,700 and $1,800 above where we were in 2011.

So, the comparison to November I think is a bit of an outlier. The important thing is to look at those year-to-date and year-over-year numbers.

Adam Jonas – Morgan Stanley

Fantastic. Thanks for clarifying guys.

Kurt McNeil

Okay.

Operator

The following questions will conclude the analyst portion. Following this question, we’ll proceed with the media portion of the question-and-answer session. (Operator Instructions) The final analyst question is coming from the line of Colin Langan with UBS. Please go ahead, sir.

Colin Langan – UBS Securities

Okay. Thanks for taking my questions. There’s just two questions. First, any quantification of the impact on the total SAAR this month from Sandy? And how much of that recouping of vehicles is actually helping 2013 in your estimate?

Kurt McNeil

Didn’t see a lot, Colin from – keying in on the northeast, we did not see a lot of impact – recovery impact.

Colin Langan – UBS Securities

So, I mean, what is your – I mean, it seems like the overall SAAR seems higher, I think, it’s higher than the – looking almost in line with your outlook for next year. So, is there anything unusual this month that would – other than Sandy that would have helped the SAAR out?

Kurt McNeil

Well, it’s historically a very robust month for our business and our industry. The positive economic indicators that Mustafa covered housing, consumer credit, it’s all helping. We definitely saw a jump in business post-Christmas, which also tied somewhat into the progress they made in Washington. So, all those things, the tax breaks that people get particularly on full-sized trucks, it led to a pretty healthy SAAR to your point somewhere in that 15.5 million to 15.7 million range for the month. So – but, we think there’s a lot of positive factors that impacted that.

Colin Langan – UBS Securities

Okay. And then, you mentioned earlier that inventory, you felt that overall inventory was good, but it is shy of what your original target was. I thought you originally guided 660,000 to 670,000. So – and then, any new targets for where inventory should be in the near term or I mean, it seems like there’s still a bit of a gap to your original target?

Kurt McNeil

Well, our inventory came down significantly, and quite frankly, the targets, we don’t want to get to the point where we’re driving behavior based on hitting targets on a monthly basis. So, we’ve tried to be as transparent as possible, particularly on the full-sized pickup side, which we’ve continued to get a lot of questions about, obviously, but – and in that case, we ended up right on the high end of our range, which we’ve communicated. So, we feel we’re in a very good place. With the industry continuing to improve, looking at a 15 million to 15.5 million industry for 2013, we certainly want enough inventory to take full advantage of that.

Colin Langan – UBS Securities

Okay. And just one last question, what is your rental fleet mix for December and how does that compared to last year?

Kurt McNeil

Yeah, I’ll give you the fleet breakdown including rental for the month and then the year; usually ask for that. So for the month of December, fleet was 21.4% of our business, so light versus the calendar year, which I’ll give you in a minute, rental was 14.1%, commercial 5.7%, government 1.6%, for that total of 21.4%. Calendar year-to-date, we told you we were going to be in that 25% to 26% range. We ended up at 25.9%, rental was 16.6%, commercial 6.3%, government 3%.

Colin Langan – UBS Securities

Okay. And what was rental year-over-year? What was it last year at 14.1% versus last December?

Kurt McNeil

Rental was up for the calendar year, 3.4%.

Colin Langan – UBS Securities

Okay. All right. Thank you.

Operator

Our next question is coming from the line of Tom Krisher with The Associated Press. Please go ahead.

Tom Krisher – The Associated Press

Hello, Happy New Year.

Kurt McNeil

Happy New Year, Tom.

Tom Krisher – The Associated Press

I just wanted to ask the overall number for the year, up 3.7% is behind what the rest of the industry is growing at 2013. You’ve got a lot of new products in the pipeline, a lot coming next year. Do you see that reversing next year and maybe taking – getting a bigger slice of the pie?

Kurt McNeil

Well, Tom, we feel good about – about where we ended up for the year. Obviously, there were a number of factors that made the industry interesting in 2012. Asians coming back strong post-tsunami obviously had an impact. But when you look at, maybe you saw the press release, the first U.S. manufacturer to sell a million units that get 30 miles per gallon or better, I mean, we feel that we have, to your point, the portfolio across the entire range of vehicles to take full advantage of the industry as it continues to grow. So, we’re excited about our current portfolio on what we have coming.

Mark Reuss

Let me just add to that, Tom, and Alan may want to add something too. This is Mark. You’ve got to be careful. Our portfolio is the very oldest in the industry right now. And yet, we have the highest average transaction prices. So, we’re setting the stage here from a residual basis, from a value basis, and from a new model basis to launch the biggest product portfolio initiative in General Motors’ history.

And so, there’s a huge opportunity for us. When does it actually happen? It happens when we begin selling new things like the Impala, new things like the Encore from Buick, which we don’t have any availability on right now. We’re just getting availability on the new Acadia, which is very hot in GMC. And then, we start doing the trucks and then the SUVs and then the mid-sized trucks. In the mix of all of that, we have the new Corvette. We have a massive improvement for the new Camaro.

We have all of these cars and trucks happening in the next year, year and a half. So, if there’s a switch that you’re going to throw and say this is when – you know judge us, give us 18 months and you’re going to see the whole portfolio turned. It will be the biggest portfolio turned, I think, in automotive history.

And so, looking at that and looking at what we’re going to make from a financial standpoint as we close the year, I think we’ve done a great job in North America. This team has done a great job in preparing for these launches from a residual value, building the brands back and building our stores back. So, I think that’s the proper way to look at it.

Tom Krisher – The Associated Press

So, you’re not, I mean, we talked about this before, you’re not so concerned if you slip a little bit in market share, it’s profits that you’re concentrating on?

Mark Reuss

Well, no, you missed what I’ve said. Okay, Tom, we are always concerned about market share, always. But we’re not going to give it away like we did in the past and burn the residuals and the brand values in anticipation of the biggest product portfolio launch that we’ve had in history. So, it’s not an either/or thing, we want both. But we’re not going to destroy the brands that we’ve built over the last three years in North America. We’re not going to depress the store value of all of our dealers that have worked so hard to rebuild their stores and their networks. We’re not going to do all that for a month of share in preparation of the biggest product launch we’ve seen in our history. So I think that’s the way to look at it.

Tom Krisher – The Associated Press

Very good. Thank you.

Kurt McNeil

Thanks, Tom.

Operator

Our next question is coming from the line of Jeff Bennett with Wall Street Journal. Please go ahead.

Jeff Bennett – Wall Street Journal

Mark, Kurt, I was just wondering if you could add a little more color to what Mustafa had said about the economy. What are you hearing from dealers going into 2013, I mean, consumer confidence is back, they have access to money. Is it kind of back to business as usual, prerecession?

Kurt McNeil

Yeah, I don’t think they would say business as usual because it’s certainly has been challenging. Every month is a fight, we understand that. So we feel good about it from a standpoint. I think that dealer body would tell you they feel good about it, that’s why they’re investing the millions of dollars in their facilities. I mean they’re bullish, but it has – it’s a battle, and they know that. So, Mustafa, do you have anything else you want to add economically?

Mustafa Mohatarem

Yeah. I think one has to be careful. We’re not talking about boom times when we’re selling 17 million, 17.5 million units. What we’re seeing is a very steady improvement that sort of is paralleling the improvement in the underlying economy. What’s really encouraging is, that people are much more confident about jobs, banks and other credit institutions are much more willing to lend. And so, you’re seeing the customer continue to come back into the marketplace, and the steadier the pace, the better for us long-term. Getting away from the boom and bust cycle is really important. So a steady growth is what we’re hoping for and that’s what looks likely to happen at this point.

Jeff Bennett – Wall Street Journal

Okay. And just one other, it looks like and I know that you’re going to have a big year with Chevrolet coming up, but it seem that Cadillac really kind of finished the year almost with lackluster results. So I’m wondering what do you sense is going on there, kind of any insight into that?

Chase Hawkins

Yes. Hi. This is Chase Hawkins speaking. We – if you look at the numbers and you compare year-on-year – if you look at Cadillac sales overall from a total point of view and a retail point of view, I think we ended the year pretty strong. You’ve got to remember as well that we launched XTS and ATS pretty late in the year. We also made adjustments to CTS from a production point of view, understanding that there would be some impact from ATS.

So we’re just starting to get momentum on these two key car lines here at the back end of the year. So I think overall, we ended pretty strong. It’s established for us a base from which to grow the brand in 2013.

Jeff Bennett – Wall Street Journal

Okay, thank you.

Kurt McNeil

Thanks, Jeff.

Operator

Our next question is coming from the line of Tim Higgins with Bloomberg. Please go ahead.

Tim Higgins – Bloomberg

Hi, gentlemen. Thanks for having me on. I appreciate it. Mr. Reuss, kind of follow up on Jeff’s question. Could you – I’d love to hear some of your thoughts particularly about the industry this year and why you have confidence on a 15 million to 15.5 million industry number.

Mark Reuss

Are you asking me or Mustafa?

Tim Higgins – Bloomberg

Mr. Reuss. For you, Mark.

Mark Reuss

Okay. Yeah, I feel pretty good about it, especially this last month. I mean, this month we ran over 15 million. It’s superheated, you know that. But I’ll say what I said maybe a month or three weeks ago, the housing start thing that I said is validated.

The fiscal cliff piece of it, I said there – I’m not sure there’s going to be a massive change because of it in the way we operate, which I still stand by that even though we’ve got apparently a deal that is not well clearly understood yet but there is a deal. So I think the underlying fundamentals of the economy, as Mustafa mentioned, are very sound and the access to money is sound.

And so, I think you see employment steadily increasing. Those are reasons to see the 15 million and 15.5 million is still – underlying, is still there, I think. I’m not sure there’s anything else to say other than we don’t know what tsunami is next so we don’t know what apparent crisis is next. We don’t know any of that. But on a steady state basis of improvement on the fundamentals, I think it’s still – I think everybody is pretty together on that here.

Tim Higgins – Bloomberg

Yeah, you sound pretty upbeat.

Mark Reuss

Yeah. I think it’s pretty upbeat.

Tim Higgins – Bloomberg

Okay. Hey, Don, I have a question for you about the Malibu. Just one more question please. As I look at the sales, it may be a little bit down in the month. Is this an inventory issue or is this just a mix issue or what’s going on?

Don Johnson

Actually, December was really good for Malibu. We were up 5% retail and up 14% month-on-month. What you really seen in December is a bit of falloff due to some of the seasonal demands of our fleet customers. So fleet was down, but overall a very good month on a retail basis.

Tim Higgins – Bloomberg

So the high volume versions of the Malibu are hitting the dealerships at this point. There’s no switchover from the fall remaining.

Don Johnson

No, I mean we – we’d still like a few more turbos in the mix right now, but generally inventory mix is not a concern right now.

Tim Higgins – Bloomberg

Okay. Thanks a lot, guys.

Kurt McNeil

Thanks, Jim.

Operator

Our next question is coming from the line of Brent Snavely with Detroit Free Press. Please go ahead.

Brent Snavely – Detroit Free Press

Hi, everybody. I was just wanted to look at the Chevy sales performance over the year, an increase of 4.3% even though you have some good hits with Sonic and Spark and Cruze selling pretty well too. But why would – can you just tell me why Chevy sales were outpaced by industry sales increase in 2013?

Don Johnson

Yes, it’s Don Johnson with Chevrolet again. As Kurt mentioned earlier, a lot of things happened in 2012, a lot of competitors coming back. But I think when you reflect on the total mix including what happen with our pricing, you can see that we actually raised our ATPs during the year. We maintained very good discipline and at the same time, we still delivered a 4% sales increase particularly when you look at our small cars. Our small car portfolio was up 50% in 2012.

Again, a real testament to the strength of our product, to our fuel efficiency and the focus on cars, clearly as we get into 2013 and launch our new pickup trucks, as Mark said, look over the next 12 to 18 months and you’ll continue to see growth in Chevrolet.

Brent Snavely – Detroit Free Press

Okay, thank you very much.

Kurt McNeil

Thanks, Brent.

Operator

And our final question is coming from the line of Melissa Burden with Detroit News. Please, go ahead.

Melissa Burden – Detroit News

Hi, thanks for taking my question. I just had a couple of questions on inventory levels of some of the models if you’re able to provide a little color there, particularly on Cruze, the Volt and Malibu? Would you be able to tell us where you ended December?

Don Johnson

Yeah. It’s Don Johnson with Chevrolet. Again, I’ll start with the Cruze. Landed dealer stock on a total basis is around 68 days’ supply. So again, right where we like to be with Cruze. Volt, we continue to be low on days supply, 32 days’ supply. In fact, out in California we’re still at about 13 days’ supply. We’re expediting as many products as we can to get out to California.

Malibu, we’re just over 120 days’ supply, a little higher than we’d like to be, but certainly as we go forward we continue to see the strong sales months like we did in December. We expect that that will come in line.

Melissa Burden – Detroit News

Okay. Would you be able to give any sort of the difference between November and December with those vehicles where they ended November? Do you have that information?

Don Johnson

Yeah, I think I don’t have those numbers with me right now. I know Jim Cain just – indicating he’ll get back to you. I know Malibu in particular we brought down by about 9,000 units this month. But we’ll get you those specific numbers.

Melissa Burden – Detroit News

Okay, thank you very much.

Jim Cain

Okay, well I’d like to thank everybody for joining us. If you have any follow up questions, you can reach me, Jim Cain, in the office. I’ll be around all day and enjoy the rest of your day.

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: General Motors Company Management Discusses December 2012 U.S. Vehicle Sales (Transcript)
This Transcript
All Transcripts