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General Motors Company (NYSE:GM)

August 2013 U.S. Vehicle Sales Conference Call

September 4, 2013 11:00 AM ET

Executives

Jim Cain – Senior Manager, Sales and Executive Communications

Kurt McNeil – U.S. Vice President of Sales

Dave Kanous – Director of Fleet Operations

G. Mustafa Mohatarem – Chief Economist

Alan Batey – Senior Vice President, Global Chevrolet Brand Chief & U.S. Sales and Marketing

Don Johnson – Vice President, Chevrolet Sales and Service

Brian Sweeney – Vice President of Buick GMC, Sales and Service

Analysts

John Murphy – Bank of America Merrill Lynch

Brian Johnson – Barclays Capital

Adam Jonas – Morgan Stanley

Rod Lache – Deutsche Bank

Tom Krisher – Associated Press

Ben Klayman – Reuters

Jeff Bennett – Wall Street Journal

Tim Higgins – Bloomberg News

Melissa Burton – Detroit News

Nathan Bomey – Detroit Free Press

Ted Reed – The Street

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the General Motors Company August 2013 U.S. Sales Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session (Operator Instructions). As a reminder, this conference is being recorded, Wednesday, September 4, 2013.

I would now like to turn the conference over to Jim Cain, General Motors Communications. Please go ahead.

Jim Cain

Good morning and welcome to the call everybody. We’re going to follow our usual format today. We’ll have a brief presentation from Kurt McNeil, who is our US Vice President of Sales Operations and then we’ll take your questions and we have representatives from all of our brands as well as our commercial fleet team here and our Chief Economist, so whatever is on your mind we will be happy to address it. The last thing as always, our conversation today is governed by our disclosure on forward-looking statements.

So with that said, Kurt, the call is yours.

Kurt McNeil

Thank you, Jim. Good morning everyone and thank you for joining us Today, General Motors is announcing August sales of 275,847 vehicles in the U.S. this is our highest sales total of the year compared to last August we are up 22% on a retail basis. Our fleet sales were down about 8% which reflects the number of factors including a temporary discontinuation of our mid-sized pickups and fewer fleet deliveries on cars like Impala and Malibu, when you net everything out, GM sales were up 15% in total and we expect the Light Vehicle SAAR to fall in a range above 16 million vehicles.

It’s a great month, any time, when you see all four of our brands return to double-digit sales increases on both total and a retail basis. Based on everything that we see the economy is on solid footing, which means the industry should remain strong, heading into the next phase of our aggressive new product cadence.

As we noted in our press release, August was our best sales month since September of 2008 and that was the month that Lehman Brothers failed. We all know what happened after that and how difficult the next few years were for everyone.

But during that time, our designers and our engineers laid the foundation for today’s success. On the product front, what really got the ball rolling was the launch of the Chevrolet Cruze, which went into production at our Lordstown assembly plant almost three years ago to today.

We think the Cruze is emblematic of GM’s progress on many fronts. But simply stated, we’ve replaced a competitive car with a great car that was a much better value and customers really responded.

Over 36 months, we have sold exactly 677,030 Cruzes in the United States and we’ve been able to replicate its success with other global products such as the Spark, the Sonic and more. It’s been a steady upward trajectory for us in many respects. We have won the North American Car of the Year twice, and we have nine products in the 2014 car and truck competition. The 2014 Chevrolet Impala was named the top Sedan in the country by consumer reports.

GM tops the 2013, J.D. Power initial quality study and Chevrolet had five segment awards which is more than any other brand, we entered new segments with the Chevrolet Volt and Spark, the Buick Encore, Buick Verano and the Cadillac ATS, we dramatically improved the resale value of our vehicles. We returned to competitive levels of leasing and we have embarked on a multibillion dollar program to renovate our dealership sales and service facilities at all 50 states.

Truly, if our first Cruze customer would walk into a Chevrolet dealership today, he or she wouldn’t recognize the place. Let’s dig into our August results and you can see that our transformed line-up of cars, trucks and crossovers is performing very well. For example Cadillac, GMC, Buick and Chevrolet all posted double-digit total and retail sales increases. Buick posted its best August on a retail basis in 10 years and Cadillac had its best retail August since 1989.

Full-sized pickup sales were up 15% in total and 16% of retail, large pickup sales to small business customers were up a robust 83% and large van sales were up 55%, which is a positive economic indicator. Crossovers were up 34% in total and 28% in retail and cars were up 8% in total and 27% at retail.

Several nameplates had their best August ever, including the GMC Terrain, Buick Enclave and the Cadillac SRX. In addition, the Buick Encore and Verano, the Cadillac XTS and the Chevrolet Spark, Sonic, Equinox and Volt had their best months ever.

We also saw a very large retail increases for the Chevrolet Malibu and Impala, which were up 93% and 76% respectively. And in fact, August marked the best retail sales month for today’s Malibu since we launched the car that strong across the board. And with so much customer interest in our products and favorable buying conditions, incentives were down slightly from July on both the percent of ATP on an absolute basis. The strong summer selling season has also paved the way for a smooth transition to the 2014 model year.

In particular, we are very happy to report that the 2014 pickup launch continues to go very smoothly. All three light duty body styles are now in production. So are our V6 and 5.3 liter V8 engines. In this fall, we’ll launch the 6.2 liter V8 Powertrain. We remain very much on track to deliver the plan for the calendar year that we outlined several months ago, which is for about half of our large pickup production and about 1.25 of our sales to be 2014 models.

The next major truck milestones for us occur later this month, when we will unveil the next-generation of our Chevrolet and GMC large SUVs in our next new heavy duty pickups, all of them go into production in the first quarter of next year. So as you can see, the next several months are going to be very busy and an exciting time for us.

With that said, it’s now time for the Q&A portion of our call. Joining us are Alan Batey, Senior Vice President of Global Chevrolet, a North America Sales and Service and Marketing; Don Johnson, Vice President of Chevrolet Sales and Service; Brian Sweeney, Vice President of Buick GMC, Sales and Service; Dave Kanous, Director of Fleet Operations, who is representing our Fleet & Commercial Sales team; and our Chief Economist, Mustafa Mohatarem.

Okay, Operator let’s take some questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now proceed with analyst portion of the question-and-answer session. (Operator Instructions) And our first question comes from the line of John Murphy at Merrill Lynch. Please proceed with your question.

John Murphy – Bank of America Merrill Lynch

Good morning, guys.

Kurt McNeil

Hi, John.

John Murphy – Bank of America Merrill Lynch

First question Kurt, on pricing in general in industry, I mean there is a lot of noise out there obviously always is on incentives. That doesn’t sound like it was a massive ramp up in incentives on a year-over-year basis or even sequentially. Just curious if you can comment on that and really on just merchandizing in general, was there a real increase in ad spending to get the consumer in or with that level as well?

Kurt McNeil

John, I mean not a lot of activity like you said, I mean industry ATPs were up a couple of hundred dollars month-over-month, incentive spend was down less than a $100, I mean pretty flat. So a lot of activity or certainly throughout the month and certainly going into the Labor Day holiday, so there was a lot of activity in and around the holiday and from a media standpoint and the share of voice, like the competitors, that’s been pretty aggressive there, I mean spending a lot of money on share of voice, but nothing real unusual.

John Murphy – Bank of America Merrill Lynch

Okay, that is helpful. Second question I think for Dave, I just wondering if you could comment on what is going on with fleet and timing here. I know in the last call, you were talking about August being a weak fleet month, so you gave us a heads up on that. So I hope there is anything too surprising? But is that sort of weakness or timing done and we’ll see a normalization through the remainder of the year? And also just curious if you can comment on the mid-size pickup sort of temporary low here that will impact fleet maybe for a couple of months to come?

Dave Kanous

Yeah, John, the fleet customers got in early, kind of ahead of the recovery and then have watched the recovery as it’s developed. The tenders we’re working with now would indicate that business is coming back pretty well for the balance of the year. In terms of Colorado, we just can’t wait to get next year’s Colorado, it’s going to be a terrific car for the commercial market, but we will get away before we get there. So it’s the Colorado itself probably down around 1000 units is the impact there but the small business segment is doing extremely well as Kurt noted. Commercial fleet was flat on the year and month and then in terms of the rental business, we were flat as well.

John Murphy – Bank of America Merrill Lynch

Okay, that’s helpful. Then maybe just a last question for you, Mustafa. We are hitting a milestone here, if you guys have the correct estimate of a 16 handle on the SAAR, just curious if there is anything that you see going forward that really creates a lot of risk to the downside to sales or are you looking more sort of for the buyers to how things would shape up slowly grinding higher in the months and hopefully years to come?

G. Mustafa Mohatarem

John that has been really the interesting part of this recovery that there has been a lot of negative factors outside the auto industry throughout this recovery with the oil price, buckets Libya, talk of conflicts everywhere when you look at the sales recoveries, it has been very steady and pretty much on track with the 90s and 80s recoveries and actually quite a bit better than the front end recovery, so I’m very confident that we will continue to track along previous recovery with relatively steady growth certainly there is always some variation month-to-month. But we continue to project a fairly steady recovery.

John Murphy – Bank of America Merrill Lynch

Okay, thank you very much.

G. Mustafa Mohatarem

Thanks.

Operator

Our next question comes from the line of Brian Johnson of Barclays. Please proceed with your question.

Brian Johnson – Barclays Capital

Good morning team. Have probably a question following up with Mustafa but then also throw it out to the sales team for their thoughts. Ford mentioned on their call that the average age of trade-ins was fairly high, so it was just kind of three questions one is that true for you as well? I assume it would be two, high trade-in age would imply that the consumer may very well have paid off their prior loan.

And are you seeing that as either an impediment or we reaching some sort of tipping point where the consumers willing to make that additional $400 or $500 a month dent out of their budget and three just kind of tactically is that an issue the dealers have had to overcome and working with GM Financial you have had to overcome?

G. Mustafa Mohatarem

Yeah, basically when you look at it the average ages of fleet right now is the highest it has ever been. With the economy growing steadily and most important with this job market fairly stable, in the sense that the fear of losing your job is dissipating, we expect that more and more people that delayed the decision to buy will keep coming into the market and that underlies my expectation and forecast that we will continue to see pretty steady growth, I think I’ll let Kurt answer the finance question.

Kurt McNeil

Yeah, I mean Brian that the thing that probably, we’re most excited about is the leasing element, without any leasing in the market for us, obviously the only thing we had coming back are traditional finance customers which tend to be riding an older vehicle, just by the nature of it. We’ve got a lot of lessees coming back to us here in the fourth quarters and that continues to grow. So there is an opportunity from a retention standpoint that we’re pretty excited about. Don?

Don Johnson

Hey, Brian, it’s Don Johnson with Chevrolet. The other thing that our dealers seen older vehicles come in, but because they’re paid out that also means the customer has some equity in it, which actually helps them get into a new vehicle easier. The new vehicle are getting into typically has better fuel economy and often they can finance it just given market rates at a much lower rate than they had previously. So I actually think it’s a real positive thing for new vehicle sales as we go forward.

Brian Johnson – Barclays Capital

Okay. And one last question Mustafa, one of the departments store has mentioned, they thought there might be a crowding out effect from auto sales. I guess that’s good for GM, it’s good for the work U.S. I thought. But what’s your view on that topic?

G. Mustafa Mohatarem

Again this recovery has been somewhat unique in the sense of people have stayed current on their auto loans. People decided early on that they would rather walk away from their home and stay with their cars in this recovery. So I’m not sure, we’re seeing any evidence of crowding out, out of autos anywhere.

Brian Johnson – Barclays Capital

Okay, thanks.

Operator

(Operator Instructions) And our next question comes from the line of Adam Jonas of Morgan Stanley. Please proceed with your question.

Adam Jonas – Morgan Stanley

Hey, everybody. So you mentioned that incentives were fairly stable month-on-month. I’m wondering again remind us with your definition of incentives includes the impact of dealer stair-step program?

Kurt McNeil

Yes, they would.

Adam Jonas – Morgan Stanley

Okay. Our understanding was that those programs were obviously quite helpful in your successful reduction of the 2013 model your inventories, again you done very well. I was just wondering is that something consistent? Is that consistent of that accurate? If that was a part of what was going on in the month as far as your 2013 inventory level at a point where you pull down the stair-step down?

Kurt McNeil

Yeah, just at a general level, I mean we treat stair-step as a tactic that’s in the tool box that we use at any particular month. I wouldn’t say that we over index on stair-steps and it’s varies from brand-to-brand. I think last month, Chevrolet did use the stair-step program, while our other brands didn’t and that’s changing now here in the month of September, but we don’t necessarily over index on stair-step program that’s just one of many tools that we utilized.

Adam Jonas – Morgan Stanley

Okay. And just kind of on the same vein at least moving away from stair-step at least, to the extent that efforts whether they’re promotional or otherwise helped to get that 2013 inventory out and consumers hope they were getting a good deal and probably did get a better deal. Do you think there is a risk we might have Rob Peter to pay Paul a little bit or we might have to see some hangover in September and kind of reflecting August is very good reduction in the inventory?

Kurt McNeil

I would say, no. Adam, I think a lot of it is the industry continuing to grow.

Adam Jonas – Morgan Stanley

Okay.

Kurt McNeil

As Mustafa stated, and I think there is still as you look across all the manufacturers, there is still a decent supply of 2013 inventory. We’re switching our incentive cadence than tactics on the 2014 as the inventory ebbs and flows. Other than the fact that it’s a shorter month, I don’t see anything being pulled ahead.

Adam Jonas – Morgan Stanley

Great. And just lastly kind of housekeeping; on a capacity additions, I think you’ve announced this year including third shifts in Arlington, the extra shift to Detroit-Hamtramck to make the Impala and I believe you’ve expanded Bowling Green a bit with the second shifts with that for Stingray. Are those now on full effect or they’re kind of – we still have some more ramp up left to go on these by the end of the year?

Kurt McNeil

It probably depends on which plant, but we’ve been asked about production, a number of times. We saw the industry continuing to grow slow steady growth. I think we had what we considered a very good plan and where we continue to tweak that every month. But we’re pretty happy with where we are. We think we’re in a good place. And all of our incremental production will be tweaks along the way. We don’t feel like we’re in any kind of a difficult spot here.

Adam Jonas – Morgan Stanley

That’s great. Thank you very much indeed.

Kurt McNeil

Thank you.

Operator

Our next question comes from the line of Rod Lache of Deutsche Bank. Please proceed with your question.

Rod Lache – Deutsche Bank

Thanks. Good morning everybody.

Kurt McNeil

Good morning.

Rod Lache – Deutsche Bank

Could you give us what your truck inventory is overall? I think you’ve pointed out that you had about two months on the old truck. What percentage of your inventory on these trucks is that 2013 model of the year?

Kurt McNeil

Yeah. Rod, we’re trying to get away from all of the over details on the pickups, especially as we transition from one to the other. We feel pretty good about the fact that roughly as you look at our light duty sales about 30% of that was the new pickups, and we’re still seeing through to what we said repeatedly that 50% is going to be our production and then 25% of our sales this year will be the new pickup.

Rod Lache – Deutsche Bank

Okay. Could you tell us how the average transaction prices are trending on the trucks at this point?

Kurt McNeil

Yeah, I mean if you look overall at our full-size pickups, our ATPs were up, our incentive trend were down. We’re still bringing a lot of our mix, double cabs and our regular cabs are just really selling the ramp up and yet to the dealership. But there is no question that we’re still looking at lower incentives and a richer mix with the new trucks, no question.

Rod Lache – Deutsche Bank

What is the magnitude, like if you looked at J.D. Power, one of the external sources, what are they showing us the increase in truck average transaction prices?

Kurt McNeil

It’s hard to say because it’s all blended. But at this point because we’re too early on and loaded primarily with crew cabs and heavier contented vehicles, most of that data is going to be skewed, Rod.

Rod Lache – Deutsche Bank

Right. Okay, all right. Well, maybe just a different question could you just give us your thoughts on how you think about the sensitivity to fuel prices and interest rates at this juncture, are there kind of hot button points, fuel prices or rates currently are around 3.5% on new car loans, are there points that you that you – through which you would expect to see any meaningful impact in through which you would expect to see some impact either in terms of mix or demand?

Kurt McNeil

Rod, on fuel prices, two points. First the customers seem to be getting very useful fairly wide swings in fuel prices. Two years ago, we saw an impact on full-sized trucks when prices shot up, but it came down very quickly and people have seen that extreme variability in prices and we’re not observing much of a reaction in the marketplace on fuel prices at this point.

No I can’t comment if something sends them skyrocketing or down whether to get out of the range people have gotten accustomed to but right now people seem to be comfortable with fuel prices. On interest rates, obviously that does have an impact but fortunately Ben Bernanke has made a commitment that he is not going to be rising interest rates, short-term rates anytime soon. So, on both guards we’re fairly comfortable with the outlook we have.

Rod Lache – Deutsche Bank

Okay. Thank you.

Operator

We will now proceed with the media portion of the question-and-answer session. (Operator Instructions) And our next question comes from the line of Tom Krisher of Associated Press. Please proceed with your question.

Tom Krisher – Associated Press

Hi, I want to kind of follow-up on John Murphy’s question. You’re sort of back to prerecession sales levels now. We hit 16 million – we are probably going to hit 16 million. Were you surprised that we are there and do you think it’s here to stay?

Alan Batey

Let me answer the second one first. I think it’s here to stay. Surprised, I don’t know, I call it surprise; we were expecting to hit in the fourth quarter. It’s a little earlier, but not a big surprise. Given what’s going on in the economy, the age of fleet, and again keep in mind the job stability. That’s a key element in the purchase decision, will I have a job tomorrow and people are becoming much more secure in the job.

Kurt McNeil

And Tom my version – this is Kurt, my version of that is as we continue to see that improve with our new products in the marketplace today and what we have coming in the back half of the year, I mean for us to be able to gain almost a half a point of share year-to-date and then in addition to the great new stuff that we have coming in the back half of the year, we’re really excited.

Tom Krisher – Associated Press

Okay. Also true car is saying that the average transaction price was north of $31,000 and it was the highest that they have seen are you seeing I mean you guys said you were seeing raising ATPs. Is that going to continue for the foreseeable future as well?

Kurt McNeil

At this point, if you look over the last three or four years, we’ve seen modest improvements in ATP each year as demand has strengthened. I think what you might observe going out next year probably is you begin to get the marginal customer coming back and they tend to be more price sensitive, so which is good news for the economy that the marginal customers coming back but then they have a slight downward effect on the ATPs. But again that’s a good news story from my perspective.

Tom Krisher – Associated Press

Yeah, certainly it is. Thank you, guys.

Operator

Your next question comes from the line of Ben Klayman of Reuters. Please proceed with your question.

Ben Klayman – Reuters

One, I just wanted to start with a clarifying question. Kurt when you talk about lot of activity around the holiday weekend, are you talking about marketing or is that incentive spend?

Kurt McNeil

Combination of both, I get Ben but primarily marketing there is a number of competitive set including us that had Labor Day events. It’s a big selling weekend for a dealer body, so a lot of activity in marketing and merchandizing.

Ben Klayman – Reuters

Okay. And then to follow on stuff that Tom and others have mentioned you used these terms like Mustafa said here to stay, you guys earlier talked about you did this wasn’t a pull-ahead from September. So but I’m more specifically when we’re looking at September and beyond this for the rest of the year, can we maintain the way that we are going to come in at specifically this month for August spending, in other words if we come in at 16 or above 16 that you guys are expecting can the industry really maintain that specific rate for the rest of this year on a monthly basis?

Kurt McNeil

Absolutely, I mean again, I’ll appeal to history, that historically when you look at auto sales, while you do get month-to-month variation, they do follow a trend and with the underlying economy fairly solid and it’s still very high average age of new vehicle fleet. I have full expectations that we’ll continue to see fairly steady industry.

Ben Klayman – Reuters

Thank you.

Operator

Our next question comes from the line of Jeff Bennett of Wall Street Journal. Please proceed with your question.

Jeff Bennett – Wall Street Journal

So Kurt and Mustafa, I was wondering then, is GM expecting to change? What you are estimating for the industry to come in at? Do you think you’ll now come in? The industry will come in at $15.8 million to $16 million for the year?

G. Mustafa Mohatarem

Mathematically, yes. I mean the fact that is sales at this point are slightly above where we projected them earlier in the year and given my previous response to previous question, yes. That’s likely to happen. I don’t know if we will change our forecast per say, but realistically you will begin to have to make the month-over=month adjustment.

Jeff Bennett – Wall Street Journal

So based on what you see now, you’re expecting sales for the end of the year, will come in at what now?

G. Mustafa Mohatarem

That will definitely be above the $15.5 million that we had, it was our forecast before.

Jeff Bennett – Wall Street Journal

And Kurt, so do you want to change that now?

Kurt McNeil

No.

Jeff Bennett – Wall Street Journal

Why is that?

Kurt McNeil

I mean, obviously we came out with the range of $15 million to $15.5 million. We’re happy that it’s exceeding that. We’re happy that we’re continuing to grow share in that kind of environment, so it just very positive. I guess we don’t feel compelled to put a stake in a ground and declare a number.

Jeff Bennett – Wall Street Journal

Okay. And just on top of that, I’m wondering kind of the enthusiasm that you are seeing out there overall, is it just a combination now of the replacement and those that had been on the bench waiting are now all in the game, do you feel I mean you had said I guess earlier in the year that you were still waiting for others who kind of know about their employment situation? So do you feel now everyone is in and choppy?

Kurt McNeil

I would say everyone is in by any means, I mean you’ve got a large group of younger people that is still either don’t have jobs or don’t feel secured in their jobs yet. And those are the people that I expect to start coming back into the market. We’re long ways off from reaching a point where you essentially satisfied all the customer demand.

Jeff Bennett – Wall Street Journal

And just last one Mustafa, building on Brian Johnson’s question. He was wondering the same here. Do you feel that people now were focusing more on auto sales rather than going to Target, going to Macy’s, going and shopping elsewhere? We’re trying to figure out why those, why stores and the retail hasn’t recovered as fast as autos?

G. Mustafa Mohatarem

Quite frankly I don’t believe shirt and autos are competitive set that people are trying to decide between buying a shirt and buying an auto. I think the one element that they have some foundation and there is that autos interest rate sensitive and interest rate environment is very favorable right now. And so people are much more willing to buy autos than something they may have to pay cash for immediately, but I wouldn’t make a big deal on that one.

Jeff Bennett – Wall Street Journal

Okay, thank you.

Operator

Our next question comes from the line of Tim Higgins of Bloomberg News. Please proceed with your question.

Tim Higgins – Bloomberg News

Hi, gentlemen and thanks for having me on, I always appreciate it. Hoping to get some perspective on how an industry with 16 million now compares to pre-recession levels for industry at kind of at that rate and then maybe just even kind of a peak in 2017 rate, 16 million now it feels like it means something different to folks and means something different to the industry regarding profitability of cars and maybe not have any dump vehicles in the rental fleets and that’s okay and maybe if you can comment on that?

Kurt McNeil

Sure. The 16 million right now reflects the underlying fundamental strength of the economy. I mean if you go back pre-recession especially the last two years, 2006, 2007, you did see a very high level of incentive activity. You did see all the special push, same price as employees do not observing any of that, this is being driven by the base demand for cars rather than trying to pull people in.

Tim Higgins – Bloomberg News

This is a healthy profitable level?

Kurt McNeil

Correct.

Tim Higgins – Bloomberg News

16 million, the new 17 million?

Kurt McNeil

No, again keep in mind that the population is bigger. The population of drivers is bigger. So we have got lot of room to go.

Tim Higgins – Bloomberg News

Thank you, sir.

Operator

Our next question comes from the line of Melissa Burton of Detroit News. Please proceed with your question.

Melissa Burton – Detroit News

Hi, thank you for taking my question. [Indiscernible] could find out from you guys

If you are seeing any light inventories on any of your models, I know some of the competitors are having some tight supply and some analysts’ think that sales could have been – little bit better had that not been the case. You guys have anything on that right now?

Don Johnson

Yeah, this is Don Johnson. I can speak for Chevrolet. Certainly there is some vehicles lines where we would like a little bit higher date supply and I would say Cruze down around 35 days as lower than we have been for a while even the new Impala under 60 days is a little less than we would like to see, I didn’t say anything is critical and we will make sure for the rest of the year that we are matching our supply to demand.

Operator

Okay, anybody else from any of the other brands?

Brian Sweeney

Yeah. This is Brian Sweeney. We are transitioning out of LaCrosse and Regal into the new cars, so those are coming down as per plan. Enclave and Acadia, the Crossovers have transitioned nicely out of 13s and the 14s, so those were little tight towards the end, particularly on Acadia but should bode well here as we get into September. So those are the only Buick GMC models I would call.

Don Johnson

Yes, Melissa, on the Cadillac side, we’re pretty good shape from a 2013 level you are going to see us continue to merchandize and lease 2013 through the month of September and then probably transition to 2014 in October?

Melissa Burton – Detroit News

Okay. And then just one other quick question on just a couple of the models that did really well this month Sonic in particular, what was driving that high mark this year or this month do you think?

Kurt McNeil

Yeah, as you said Sonic had its best month ever and the interesting thing about Sonic is continued to have the highest ATPs in this segment. So Sonic has actually been on a pretty good trajectory since its launch, every once in a while it goes up and down but I think it’s just a great product in that segment really holding its own.

Melissa Burton – Detroit News

Was there anything in that segment this month that led to higher sales do you think or…?

Kurt McNeil

It is number two in the segment now so it’s right here the top. So it wasn’t that any of the other competitors are weaker, I think with just more and more people we’re getting to know the value Sonic presents.

Melissa Burton – Detroit News

Okay. All right, thanks guys.

Kurt McNeil

You’re welcome.

Operator

Your next question comes from the line of Nathan Bomey of Detroit Free Press. Please proceed with your question.

Nathan Bomey – Detroit Free Press

Hi, guys. Most of my questions have been answered. But maybe just to drill down a little bit, on Impala what’s the composition of sales like there when we look at the new version versus the older fleet version? And do you expect at some point that you will turn the corner, we’ll start to see regular monthly sales increases for the Impala or do you expect to settle in at lower number given the higher quality sales that you’re doing?

Don Johnson

Yeah. It’s Don from Chevrolet again. When you look at the new Impala sales, it’s above 80% of the new ones right now, 20% the old ones. When you look at what that’s doing in the retail segment, it’s our retail sales were up 76%. So we’re clearly seeing that shift from fleets and retail that we projected. We’re up about 40% month-over-month with sales of the new one. So it continues to grow every single month and we think that trend is going to continue such that the two in combination, the 352, the new one 2014 being primarily retail car and the older one being primarily a fleet car will grow overall Impala sales going forward.

Nathan Bomey – Detroit Free Press

Okay, thanks.

Operator

And our last question comes from the line of Ted Reed of The Street. Please proceed with your question.

Ted Reed – The Street

Thank you. I have a few questions about Cruze. First of all, why were sales down this month?

Kurt McNeil

August?

Ted Reed – The Street

Yeah.

Don Johnson

It’s Don with Chevrolet again. I mean we have to really go back and look at the history. We’ve had a tremendous 90 days with Cruze. I mean we’re up 14% year-to-date. Within the last 90, we’re up 37%. So when you look at inventory, I mentioned it earlier, total inventories are about 35 days supply, so quite frankly our 2013 drill down went a little brisker I would say than we had expected. So we’re rebuilding the inventory right now and I fully expect that Cruze is going to get back on track and continue that trend.

Ted Reed – The Street

All right, thank you. And then secondly, you described Cruze is sort of a turning point for GM when it came out. So looking back to then, was there a – if you guys have doubts before it came out or was there a moment when somebody realize, hey this is really going to work and sustain GM or could you go back and look at the history a little bit and talk about your feelings in when it came out?

Don Johnson

No, I think the organization was very confident about the Cruze when it came out. We looked at the kind of capacity that we had available and we put all our cards in the table, we went strong and it’s proven to be just great vehicle in this market.

Ted Reed – The Street

All right, thank you.

Alan Batey

Yeah, this is Alan Batey. Maybe I just add some into that. I was actually doing Don’s job at the time we launched Cruze and I’ll give a lot of credit to Mark Reuss from this one. And Mark was really convinced that for the success to Chevrolet. We really needed not to compete, but to win in the compact car segment. And we put everything we could into this vehicle and really make it world-class and from day one, we have really been able to get momentum, but most importantly keep it.

And as Don said, the retail piece of this is unprecedented in Chevrolet for decades. So this was really for us and a very, very important launch and very important for dealer morale and confidence in the future. And then some Cruze, we’ve been obviously had to spring off of that and a lot of other very successful launches. So it was a defining moment and I’m not going to take the credits for that. But I think Mark Reuss deserves a lot of credit in really making this incredible vehicle that it was.

Ted Reed – The Street

Thank you. Do you mean to say that you looked at launch and said, we’ve been selling too many cars to fleet and we want a car with retail appeal?

Alan Batey

Yeah. That’s spot on.

Ted Reed – The Street

All right, thanks.

Operator

Okay, Mr. Jim Cain, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Jim Cain

I’ll just close by thanking everyone for joining us. And if you have any follow-up questions, you can meet me in the office by phone or e-mail all afternoon. Thank you.

Operator

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

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