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General Motors Company (NYSE:GM)

November 01, 2011 11:00 am ET

Executives

Don Johnson - Former Vice President of International Operational Sales, Marketing & Aftersales

Jim Cain -

Analysts

David Shepardson

Todd Lassa - MotorTrend

Adam Jonas - Morgan Stanley, Research Division

Craig Trudell

Robert Schoenberger - Plain Dealer

Colin Langan - UBS Investment Bank, Research Division

Himanshu Patel - JP Morgan Chase & Co, Research Division

Rod Lache - Deutsche Bank AG, Research Division

David Welch - BusinessWeek

Mike Colias

Greg Gardner

John Murphy - BofA Merrill Lynch, Research Division

Brian Arthur Johnson - Barclays Capital, Research Division

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Dee-Ann Durbin - The Associated Press

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the General Motors Monthly U.S. Vehicle Sales Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, November 1, 2011. I would now like to turn the conference over to Jim Cain with GM Communications. You may proceed, sir.

Jim Cain

Thank you very much, and welcome to our October sales call, everybody. As we normally do, we'll have some remarks about our results followed by Q&A. I would just remind everyone on the call that the contents are covered by our forward-looking statements, which you can read on our press release. If you haven't already downloaded our slides and press release, they are available on the GM media website and on gm.com in the Investor pages.

With that, it's my pleasure to introduce Don Johnson, who is the Vice President of U.S. Sales Operations for General Motors.

Don Johnson

Thanks, Jim. Good morning, everybody. Thanks again for joining us. As what we do each month, I'm going to start by reviewing highlights from our Chevrolet, Cadillac, GMC and Buick sales report and then we'll talk about some of the factors that we think are at work in the market and finally, spend a few minutes looking into the future. So after that, I'll take your questions.

Now as you've read by now, we reported total sales for the month of almost 187,000 units, which is 2% higher than last October sales. And last October was a month that was one of our best in 2010, so increasing on that, I think, is an important point. Retail sales were up 3%, and our fleet sales were about flat to last year, down about 200 units.

Our results, when you dig down and look at it in October, were really driven by Chevrolet, which accounts for about 70% of GM's sales in the U.S. And in a month where the Chevrolet brand is celebrating its centennial, it's really great to see this global icon deliver the goods.

Consider that sales were up 22% for the Camaro, 18% for the Equinox and 7% for Silverado and our hot-selling Cruze is up 104% compared with the combined sales last year of Cruze and Cobalt. And month-over-month, Volt sales were up over 50% versus September. And when you look at our other brands, total sales were off from last year's strong October. Sales were down 5% at GMC, 7% at Buick and 12% at Cadillac.

However, we're very pleased with our newest Buick, Cadillac and GMC products, which continue to deliver standout performances. The SRX is an example increased by 13%. Buick Regal sales increased by 40%, and the GMC Terrain was up 17%. And really, the ongoing success of these new products has helped deliver calendar year-to-date sales increases of 6% up for Cadillac, 14% up for Chevrolet, 20% up for Buick and 23% year-to-date up for GMC. And all of that adds up to 15.4% increase for General Motors year-to-date. And our market share growth during the first 10 months is almost a full point, bringing us to a year-to-date share of 19.4%.

Now without a doubt, the modest economic growth we've seen, lower fuel prices and improved credit availability were tailwinds that benefited GM and the industry all year. But for us, it really comes down to the great products that we've put into the market. And we started with very strong designs. We had very consistent launches, and then we enhanced a number of them over time with features like new 3.6-liter engine that's in the Cadillac SRX now, the new GS and Turbo models for the Buick Regal and, of course, the 42 mile-per-gallon Eco addition of the Chevrolet Cruze.

So I look back on the performance in October, I'd say that we're pleased. We're pleased with another month of year-over-year gains for GM and really for the industry. When we look at the industry, we did see some of the Japanese manufacturers start to regain their footing. As we expected, this contributed to a higher SAAR in October, what we expect will be around 13.7 million, and that's up from 13.4 million in September. And if that does come through, it will be the highest SAAR in 2011. And again, I'll remind everybody those numbers are based on light, medium and heavy-duty industry.

For us at GM, it was really a bit of a transition month in which we saw a shift in emphasis from our 2011 model years to the 2012s. More than 80% of our sales in October were 2012 models in the passenger car side, and they were about half of our truck and our crossover sales. This helped us reduce our incentives as a percent of revenue to 88%, pardon me, to 8.8%, which is down a full point from September. And if you look at that in dollar terms, our incentives were down about $300 month-to-month and down almost that same amount year-over-year. So on a relative basis for the month, we were at about the industry average and as much as 2 full percentage points below some of our full-line competitors.

When you look at what that does to our total inventory in October, we ended with around 592,000 units. And based on what we see for the industry and our sales for the rest of the year, we anticipate that we'll end the year with dealer stock levels in the high 500,000 unit range. And this, of course, includes about 200,000 full-sized pickup trucks, which is consistent with what we've been targeting, which also equals about a 90-day supply at year end.

Now if you look at October, another important transition is with the Chevrolet Volt. The Volt just received a recommended buy from consumer reports for which we're very proud and enjoying a fantastic reception from our customers now across most of the country. We added 200 new Volt dealers in October, bringing our total to more than 2,200. We now have more than 2,400 demonstrator vehicles in dealerships supporting dealer training, customer education and test drives, all key parts of our marketing strategy for Volt. And we increased our sales, as I said, by more than 50% month-over-month to more than 1,100 units. And naturally, as we continue to get more production, get those salable units, sales to consumers will follow over the next few months. All of this means that we are right on track. We have about 2,600 Volt dealers in all 50 states ready for the 2012 calendar year.

And finally, during this time of transition, we're also launching the Chevrolet Sonic, Buick Verano and the Buick LaCrosse with eAssist. And we're already seeing some very encouraging results from these 3 vehicles. Buick dealers, as an example, are expecting 40% of their LaCrosse orders with a 36 mile-per-gallon eAssist powertrain. Media reaction to the Verano has really praised its luxury, its refinement and its quietness. And the Sonic, it's been getting great reviews from auto writers across the country. In this month, we delivered more than 3,800. So I already think that's a good start for all of those products.

Before I move on to the Q&A, let's just talk a little bit about the outlook going forward. Despite the volatility that continues in the market, we continue to believe that the U.S. economy will grow slowly, which will continue to help release the pent-up demand created by 4 years of below-trend sales. That's what's been happening so far this year, and we do expect that it's going to continue into next year. Now we all know what the risks are, both here at home and on a daily basis on and off in Europe, which is why you've heard the company inject another caution when we talk about 2012. But I guess with that being considered, I'd just like to remind everyone of something that I think is really important. Today's GM is ready to compete in any foreseeable market environment because we have a low breakeven point, we have solid cash flow, extremely strong brands and a wave of new products coming.

So that wraps up my formal remarks for this month. I'm going to now open it up for Q&A. And joining us for that portion of the call are Brian Sweeney, Vice President of Buick GMC; Cadillac Vice President, Kurt McNeil; our senior economist, Sue Yingzi Su; and filling in for Alan Batey today is Ann Quint [ph] of Chevrolet. Let's take a few questions now.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question from the line of Rod Lache from Deutsche Bank.

Rod Lache - Deutsche Bank AG, Research Division

There is a bit of a debate right now over what the underlying SAAR trend is at, because we probably pushed out, I don't know, maybe 200,000 units from the summer when inventories were quite low. Was hoping you can just comment on what you might be looking at to sort of cut through sort of the ebbs and flows of the SAAR and the dip that we had and pent-up demand created from that period to come up with what you think the underlying SAAR trend is for the U.S. at the moment.

Don Johnson

Yes, when you, first of all, start with our outlook for this year, and it continues at that low end of the 13 to 13.5 range. When we look back at Q1, we're trending at 13.3. There's no doubt we're seeing some kickup in the SAAR in the last quarter due to the increased availability from the Japanese. We think the next couple of months will probably continue along at the trend we're seeing this month. And then as we get into 2012, that sort of the baseline for what we're seeing as continued slow growth in the economy in 2012. Hard to pin an exact number on it, Rod, but I think those are the sort of the big pieces we're looking at as we assess it.

Rod Lache - Deutsche Bank AG, Research Division

Okay. And just secondly, it looks like you might have experienced a little bit of a slowdown towards the end of the month at least relative to where surveys had you guys tracking kind of in the mid-month. And then I was hoping you can just kind of talk about the cadence of sales over the course of the month. And if there was a slowdown, what that might have been attributable to.

Don Johnson

It was actually a pretty lumpy month. We sort of went from starting off not too bad, got a little bit weaker. Our close last night was actually fairly good. So it would be hard to characterize any specific trend in there because it was a little bit volatile throughout the month.

Operator

Our next question comes from the line of John Murphy with Bank of America.

John Murphy - BofA Merrill Lynch, Research Division

Just wanted to ask a question on some of the competitive actions that I think were being taken out there by other automakers. It sounds like some of your competitors got much more aggressive on dealer cash and volume programs and inventory turn programs. I'm just curious if that's what drove some of the relative outperformance that we've seen so far by some of the other big competitors out there versus what was a slightly weaker performance for GM in the month.

Don Johnson

Yes, again, I think there's a couple of things. Certainly, from what we saw out in mass communications, what we hear on the street, I think your characterization of some of the competitors is pretty accurate. And I think for us, as we looked at our transition from '11s until '12s, we didn't have the same number of '11s to clear out as everybody else. I think it's important to note though that when you look at our performance this month, again, it's relative to what was one of our strongest months a year ago. So not a lot of surprises really in our performance. I would say maybe a bit of a surprise in some of the incentive activity out in the market. But on balance, a month came that in pretty close to where we expect it.

John Murphy - BofA Merrill Lynch, Research Division

And just one other question. As we look at the segment sales, and it's really kind of clear that the lower end of the market or I should say the smaller end of the market being like the Equinox and the Cruze were very strong. The middle of the market was a little bit weaker like the Acadia and Traverse and pickups were very strong. So it almost seems like there's a barbell where the economy of vehicles are doing well, and pickup trucks are doing well, but everything kind of in between is under a little bit more pressure. Is there anything in the market or any dynamics that you're seeing in showroom traffic or consumer surveys that you're doing that will drive the continuation of that barbell strategy or do you see the middle of the market coming back over time? Just curious what you're seeing in segment trends.

Don Johnson

Well, what we've seen this year is, first of all, a migration to smaller vehicles as everybody has that's new products like the Cruze, but with gas prices where they went early in the year, that's to be expected. Don't forget in the middle of the year, we actually saw pickups start to soften, and it's only in the last few months as the seasonal trend for pickups has come back and fuel prices have started to at least be more stable that we've seen that pickup piece start to grow a little bit. So you're describing it as a barbell, but if you're going to -- if the market is going to grow in full-sized pickups due to seasonal factors and flat oil prices and small cars with new entries are still going to be strong by definition because you have to equal 100%, some of the middle is going to lose a little bit long term. I think there's going to be actually a pretty good balance between small vehicles, sort of midsized vehicles and trucks.

John Murphy - BofA Merrill Lynch, Research Division

But is it fair to characterize the current buyer as sort of more utilitarian or need-based buyer as opposed to a discretionary buyer?

Don Johnson

In general, I would say that's true, and that's particularly true in the Commercial segment, in the Truck segment where pickups are much more of a need buyer than what we would have seen a few years ago when that segment ran 15%, 16% of the industry. And now, it was up over 13% last month. I think it's around 12.7% this month. So consistent where we think it's going to be probably long term.

Operator

Our next question is from the line of Chris Ceraso with Credit Suisse.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

A couple of things. Can you just clarify? I missed your comment on incentives. Did you say that GM's incentives as a percent of ATP were 8.8% in the month?

Don Johnson

Correct. I actually said 88% by mistake, but it is 8.8%.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

8.8%. And how does that compare to where GM ran in September and how is that where -- relative to where the industry was here in October?

Don Johnson

It's marginally above the industry in October, and we're down more than 1 percentage point from September.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Okay. So you're 9.8% or higher in September, and you were slightly above industry here in October.

Don Johnson

Actually both September and October were slightly above industry, but certainly well within the infield.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Okay. So for the full -- it seems that each month, you're a little bit above industry. Are you still sticking to the guidance that you'll be in line with the industry for the full year?

Don Johnson

Yes, we're sticking with the guidance that we will generally be in line with the industry.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Generally, okay. Any update on the issues in Thailand? Are you starting to experience any availability problems with components or maybe an update on the timing of the launch of the global pickup?

Don Johnson

No update on launch timing, and so far, no impact from the Thailand situation at all.

Operator

Our next question is from the line of Brian Johnson from Barclays Capital.

Brian Arthur Johnson - Barclays Capital, Research Division

A couple of questions, one internal and one more external about your customers. The internal one is you talked about the Chevrolet 100-year anniversary. When we look at the brand results, does that mean we should take the relative strength of Chevrolet versus Cadillac, Buick and GMC as really an evidence of where that marketing thrust was or is there something more fundamental? And the second, I want to get to the pent-up demand question.

Don Johnson

On a relative basis with the brands, certainly we've been increasing our advertising on Chevrolet because of the 100th anniversary, and I think that will continue to benefit that brand, not of the cost of the other brands, but rather hopefully at the cost of competitive brands. When you look at our performance as I indicated calendar year-to-date, all of our brands have performed very strongly. I'm just really glad that Chevrolet has had a good month at the same time as they're celebrating their 100th anniversary.

Brian Arthur Johnson - Barclays Capital, Research Division

Okay. So we don't say look at the Yukon underperforming the Suburban. That's not -- was some of that driven by ad support for Suburban and maybe not Yukon?

Don Johnson

I wouldn't read too much into that.

Brian Arthur Johnson - Barclays Capital, Research Division

Okay. And the second question is in terms of pent-up demand, have you looked at say the buyers who were in your truck deliveries in kind of '05, '06, '07 and just where they are now in terms of their personal balance sheets, whether they bought a used car and just whether they're financially and intellectually ready to go out and replace their cars or if there's a substantial number of those we've lost to foreclosures or unemployment or other factors?

Don Johnson

I wouldn't say that we've got that down to a fine quantitative analysis beyond the fact that it's clear given what the spectrum of our buyers was back then in terms of their credit scores, in terms of their balance sheets. We know today that, clearly, we've lost a lot of those, which is why the industry is where it is today. So the good news is that based on what we've seen this year and as we look into next year, there remain a significant number of people who are able to buy a vehicle and in an environment where if your finances are healthy and stable, it's a good time to buy a vehicle. Now what does that mean? Well, it means that even though we're at historically low levels of industry, we don't certainly see it going down at all because there is that core of people out there who are able to buy vehicles.

Operator

Our next question is from the line of Adam Jonas from Morgan Stanley.

Adam Jonas - Morgan Stanley, Research Division

So a couple of questions about individual models. Can you update us on where we are on Volt days' supply inventory? You were 84 last month. What are we this month? And what's your average transaction price you're achieving now?

Don Johnson

Average transaction on the Volt or overall?

Adam Jonas - Morgan Stanley, Research Division

Yes, on the Volt.

Don Johnson

Yes, I don't have the average transaction price on the Volt. But we can get that to you separately. The days' supply on the Volt is currently 72.

Adam Jonas - Morgan Stanley, Research Division

72 versus 84 last month?

Don Johnson

Right.

Adam Jonas - Morgan Stanley, Research Division

Okay. And in terms of Sonic early launch, has ATP there been -- how is that stacked up versus your expectations? I'm assuming you don't have that in front of you either, at least the exact number, but any thoughts on average content or ATP on the Sonic?

Don Johnson

You're really asking tough questions here, aren't you? Sonic, and again, its early days, you got to be a little careful. But Sonic is north of 17,000 ATP, which is about 1,000 more than the small car average of all of those competitors. And importantly, it's about 1,500 more than the Aveo that it's replacing. So early days, but certainly from the ATP standpoint, I would say it's meeting expectations.

Operator

Our next question from the line of Himanshu Patel from JPMorgan.

Himanshu Patel - JP Morgan Chase & Co, Research Division

I had just a couple of questions. Can you update us a little bit on lease penetration rates for GM? Where have they been for the last couple of months relative to industry levels? And if you have some data on Canada for leasing as well that would be good.

Don Johnson

I don't have the Canadian data, unfortunately. But here in the U.S. in October, we were just a little bit above 9% lease penetration. It was down a bit from September when we were at 10%. Year-to-date though, we're at about 13.6%, and that's compared to about a 15% target that we've been looking at. So we're in the ballpark of where we were targeting.

Himanshu Patel - JP Morgan Chase & Co, Research Division

What do you think the kind of mass market industry is in the U.S. right now?

Don Johnson

It's at 20% year-to-date, and it was about 18% for the month. So...

Himanshu Patel - JP Morgan Chase & Co, Research Division

Okay. And then just on your outlook maybe between now and year end on kind of industry pickup truck segment sales. Do you think this segment continues to gain share just because of some of the seasonality around the accelerated depreciation at year end or do you think the pace of improvement that we've seen so far has been so much that maybe that sort of typical effect you'd see in November, December does not happen to the same degree?

Don Johnson

I think we'll see some of that, but I think the result will still be a segment size around sort of the high 12% range. It could get into the low 13%, but it will be around there.

Himanshu Patel - JP Morgan Chase & Co, Research Division

Okay. And then just last question, it's somewhat of a technical question. I just noticed this October, I think there were 5 full weekends if you defined a full weekend as Saturday, Sunday and Monday, and I think October of last year was only 4, and I think September of this year was only 4. First of all, does that make a difference in your view on the kind of where the SAAR shook out and do the seasonal factors tend to adjust for that stuff?

Don Johnson

Now you really got me. The most important thing, I think, this month is that we actually had one less selling day. So that's more important than the number of the weekends. And over time, the SAAR should adjust for that. But the other caution on the SAAR we have to remember is it's sort of a unique time we're in, as Rod said earlier, because of the Japanese coming back into the market a little bit more right now. So do the selling days have an impact on the SAAR? That should even itself out but it is important to look at the fact that there was one less selling day this October versus last.

Operator

Our next question is from the line of Patrick Archambault from Goldman Sachs.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Just on the -- I wanted -- the 80% of your sales this month that were 2012 models...

Don Johnson

Passenger cars.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Passenger cars, okay, is -- well, I mean, maybe do you have a number for all vehicles? And can you give us a sense of where that typically is for you guys and potentially for the industry? Because it does indeed strike me as a relatively high proportion of new model cars for this time of the year, which I suppose, obviously, is helping your pricing but maybe had a market share impact that was hinted at an earlier question.

Don Johnson

Yes, I guess a couple of things. First of all, if you look at cars and trucks, crossovers, everything together, we ran about 58% of current or '12 model years. That would be a bit higher than we would normally run at this time of year, but I can't quantify what that average is. I just -- I know it's a little bit higher, and it's a little bit higher than the industry would be overall. Does that had an impact on our sales? Hard to say if it did. I still think it's a good thing because typically, we get higher ATPs and lower incentives on the new models. So it'll all shake out when all the other manufacturers go through that in the next few months. So it's certainly not something that I would be concerned about. In fact, as a general rule, it's better to sell down on your past models earlier.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

And where, forgive me if you said this already, what -- for your inventory, how much of your inventory now is '12s versus '11s?

Don Johnson

'12 is 64%.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Got you, okay. Sorry, was that cars or vehicles? I'm sorry.

Don Johnson

That is total.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Total, okay. On -- I don't know if you said it already. In terms of your fleet share of your own sales this year versus last, and if you have a similar guess for the industry, that would be helpful as well.

Don Johnson

Yes, our sales represented about -- our fleet sales were about 23% of total. So again, that's typical for this time of year and keeps us on track to hit about a 25% penetration by the end of the year. I actually don't have enough intelligence to speculate what the industry might be coming in this month at.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay. And sorry for last year, the 23% was?

Don Johnson

Last year, the 23% was 24%.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

24%, okay.

Don Johnson

So and then, just for reference, year-to-date through October this year, we're at 26.5%. And last year, it was 29.6%. And even within that, what we're seeing is a greater proportion of our fleet sales being in commercial. Rent as a percent, while still a very important part of our business, rental as a percent has gone from 21% to 18%.

Operator

The following question will conclude the analyst portion. Following this question, we will proceed with the media portion of the Q&A. [Operator Instructions] Our last analyst question is from the line of Colin Langan from UBS.

Colin Langan - UBS Investment Bank, Research Division

Don, just a quick follow-up on the last question. Did you say rental mix was 18% or was there rental mix for this month?

Don Johnson

Rental mix for this month is actually 14%. It's the year-to-date number that was 18%.

Colin Langan - UBS Investment Bank, Research Division

Okay. And any outlook on what the retail portion of the SAAR would be? I think in the past, you've given like a retail estimate.

Don Johnson

It's sort of mid-11 million, 11.4 million to 11.6 million.

Colin Langan - UBS Investment Bank, Research Division

11.4 million. Just one last question. Are there any inventory issues in the month? I noticed the Cruze, in particular, was down again month-over-month. I mean, is there constraints in certain products, some of the new launch products, or do you think you have the right inventory at this point for most of the products?

Don Johnson

On balance, I would say we have the right inventory. You'll hear anecdotally that there's still some request for additional Equinox, some additional Terrains and in some pockets, still some request for Cruze. But we're pretty close to being where we want to be in inventory.

Operator

Our next question is from the line of Dee-Ann Durbin with the Associated Press.

Dee-Ann Durbin - The Associated Press

I'm seeing Cruze at the second month that Cruze was below 20,000. I'm just wondering what's going on there. Do you think Sonic is taking some of the sales? Is that just an increase in competition now that the Japanese inventories are higher? Just wondering what's going on.

Don Johnson

It's largely seasonal because if you look at the retail run rate of Cruze in October, it is actually up a little bit over September. So most of what you're seeing is simply a seasonal effect.

Operator

Our next question is from the line of Todd Lassa from Motor Trend.

Todd Lassa - MotorTrend

A question about the percentage of sold last month that were old models. You said about 80% passenger cars and 50% trucks and crossovers. I wonder if you could break that up, break out crossovers from the trucks because, obviously, you're still selling quite a few model year '11 pickup trucks, aren't you?

Don Johnson

Yes, just let me dig that out. No, let me -- let us dig out that number and we'll get back to you at the end of the call.

Todd Lassa - MotorTrend

Okay. And if I could ask about the -- you were talking about the Cruze and other smaller cars kind of being stronger this year than midsized, larger cars. Despite, I guess, prices first going up and then coming back down to under a $3.50 a gallon or so, are you seeing -- is there any price sensitivity there given that probably a typically equipped ATP on a Cruze might be where a midsized car was just a few years ago?

Don Johnson

Yes. I mean, there could be some of that at play there. I think one of the things, at least, happening in our shop with the Cruze is we've done a really good job, Chevrolet has done a really good job of getting people and new buyers into a vehicle that is a little bit bigger than the competitors in that set. And for the value they get, for the style they get, the fuel economy they get, I think those people are going to tend to stay in a smaller vehicle long term regardless of what the gas prices do. So certainly, there's a bit of interaction with the midsized segment, but I think it's more about actually bringing new buyers into the vehicle.

Operator

Our next question from the line of Craig Trudell from the Bloomberg News.

Craig Trudell

I had a question about Thailand first. Any concern about shipments of electronic parts? Have you seen any issues yet? And do you expect to? And also now that Honda yesterday has come out and said that, that may interrupt their production into late December, do you expect to see some gains for your cars such as Cruze as perhaps their inventories suffer as a result of these disruptions?

Don Johnson

First of all, no impact that we have seen on our U.S. production. In terms of what that means for the competitive landscape, I think we just have to see that play out. I don't really want to speculate right now on what might happen to our competitors in that regard.

Craig Trudell

Okay. And then I think you also said earlier that I think above 590,000 inventory at the end of the year. Is there a target? And what would that put you on a days' supply basis at the end of the year?

Don Johnson

Right now, we're targeting, I said, in the high 500,000. So I'm giving myself a little bit of room there, and I just go with the -- I haven't done the calculation of what the days' supply is there. But the absolute number, I think, is what's probably important to you, Craig.

Craig Trudell

Okay. Do you want to be below 80 days or below 70 days at year end?

Don Johnson

Yes, between 70 and 80. Certainly, below 80 would be typically where we'd want to be.

Operator

Our next question is from the line of Robert Schoenberger from the Plain Dealer.

Robert Schoenberger - Plain Dealer

Looking at the inventory numbers on Cruze, both in September and October, you hit some really high production numbers in the 27,000 -- 26,000, 27,000 range but sales were 18,000 last month, 14,000 this month. Are you going to have to cut production in the final couple months of the year to avoid building up inventories or what's the plan for the next few months?

Don Johnson

Well, as you know, we don't give guidance on production. But having said that, we're -- that vehicle continues to be very strong seller for us. We will make sure though that we do match supply with demand going forward. Just a quick answer to the question that I said I'd get back to you on the sales of 2012's broken out by cars, crossovers and trucks. Cars, as I said, was 80%. Crossovers is close to that at 78%, and trucks are at 30%.

Operator

Our next question is from the line of Mike Colias from Automotive News.

Mike Colias

Just looking for percentage of subprime for the month and directionally if that's still going up from where it was earlier in the year.

Don Johnson

Yes, our subprime ran for the month at about 8%. That compares to about 5.5% for the industry. So we continue to lead in that regard, and that compares to 6.6% year-to-date. So as GM Financial takes on more of our dealers, as our dealers become more comfortable with that business, it's slowly growing. But it's growing at a nice, manageable pace.

Mike Colias

Okay. And just real quick on Sonic, and this may be too early, but any sense of where that's strongest regionally or where those buyers might be coming from on a conquest basis?

Don Johnson

No, I don't have that data right now, but we'll be sure to have a look at that this month so we can you give you some color on that next month.

Operator

Our next question from the line of Dave Shepardson with the Detroit News.

David Shepardson

So Don, you said you had 200 Volt dealers. You're up to 2,200 or 2,400 now?

Don Johnson

Up to 2,200 and we will be at 2,400 by the end of the year, I think, is the number.

David Shepardson

Okay. And given that you're at 5,000 now when you've got 2 months left, do you think it's realistic that you can still hit the 10,000 sales figure for this year for Volt?

Don Johnson

I've never given up on a sales target in my life. And given the momentum that we've got right now, I'm not about to give up on it now.

David Shepardson

Okay. So even though you're at 1,000 this month, do you think you can still -- you can go up to 2,500 on average for the next 2 months?

Don Johnson

I'm not going to give up. I'll keep pushing.

Operator

Our next question is from the line of Greg Gardner with Detroit Free Press.

Greg Gardner

Let me follow up on that question. I mean, why have Volt sales not increased at a sharper pace -- more rapid pace than what we've seen?

Don Johnson

A couple of things. First of all, we've been very deliberate in the way we've rolled Volt out. We started with a limited number of states. As we started the process to go out to all 50 states, we wanted to do it in a very measured manner, make sure we had dealers trained, had the parts and the tools available, that they were able to prepare the vehicle and demonstrate. I mean, a big part of the early production has gone to demonstration units in each of our dealership so they can show it to their customers. And we want them to keep those demo units and not sell them. So it's only now that we are getting to the point where we've got our distribution channel ready to accept for sale a larger number of Volts that are coming out to them. So this month seeing a 50% increase month-over-month, I think is a good indication that we've got that foundation. Now we're going to get vehicles that they can sell direct to consumers out to them, and you'll start to see those sales rise. But given our approach to methodically and carefully launching this vehicle shouldn't be a surprise.

Operator

Our final question is from the line of David Welch from Bloomberg News.

David Welch - BusinessWeek

A follow-on to the question on Volt, the 72 days' supply I take it, does that include the demo fleet cars? And where do you see days' supply going on at as sales numbers ramp up over the next 2 months? I mean, we've been hearing you guys have or you're selling everything you can build. But inventory is quite a bit bigger than it was earlier on. Just kind of give a lay of the land on that if you can.

Don Johnson

Yes, a couple of things to remember when you look at that days' supply number. First of all, that does include in transit. So again, as we're ramping up, that's naturally going to be a bit of a higher number. And quite honestly, we haven't totally tested the demand limits on this vehicle yet. So don't have a specific days' supply number in mind. But I would expect that it'll start to come down from that 72 level as we get more vehicles through the pipeline on to lots and delivered to customers.

David Welch - BusinessWeek

Do you still have people waiting for the car?

Don Johnson

In some markets, we do.

David Welch - BusinessWeek

Okay. And then the other thing on Cruze being down a bit month-over-month. Is that the -- are you're seeing any impact from the Japanese coming back? They are big players in the compact market and they finally got production going again and some inventory on the lots. So just harder competition maybe for that car?

Don Johnson

Yes, you know what, I'm actually not entirely sure right now. What I do know is that the retail SAAR is up month-over-month. We haven't seen all of the details from the competitors. So I'm not sure yet how well the competitors did in that segment. Once we get the segment share over the next day, we'll have a better idea.

David Welch - BusinessWeek

Are you seeing any pressure on that segment so far?

Don Johnson

Not yet other -- I mean, as we said earlier, Japanese had a number of incentives in place to keep their buyers in their vehicles, whether it was to keep in their lease vehicles or even avoid having them trade in. That level of incentive activity we've seen, and I think that's probably giving them a bit of a bump this month. That will be a relatively short-term mechanism. In terms of sort of visible mass incentives, we've seen them come back to the levels they were at earlier in the year but nothing that looks like dramatic or as some people have tried to characterize it as a price war, nothing like that.

David Welch - BusinessWeek

Okay. And last one for you. Cadillac's been slowing down for a while other than SRX. Is this going to be the norm for the brand until you hit ATS and XTS on the lot?

Kurt McNeil

David, it's Kurt McNeil. A couple of things going on. Actually, our CTS sales were up 1% for the month, and SRX was up 13%. So 2 of our core models were up. Part of your point, DTS is down 77%, and STS is down 51% as those 2 vehicles go out of the lineup. So we will continuously deal with those vehicles going away. Having said that, the other piece that's interesting in the luxury end is just how aggressive our competitors are. BMW outspending us by as much as $1,500 a unit, Mercedes as much as $800 a unit. So we're seeing our competitors be very aggressive in the incentive spend space. So those are probably the 2 biggest noteworthy issues for us this past month.

Operator

.

Mr. Cain, back to you for your closing remarks, sir.

Jim Cain

Thank you, everybody, for joining our call today. If you do have follow-up questions, you can reach me by e-mail at james.cain@gm.com or in my office at (313) 667-7758, and thank you for joining us.

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and kindly ask that you please disconnect your lines. Have a great day, everyone.

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