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General Motors Company (NYSE:GM)

April 2012 Sales Conference Call

May 1, 2012 11:00 ET

Executives

Jim Cain – General Manger, Communications

Don Johnson – Vice President, U.S. Sales Operations

Alan Batey – Chevrolet Vice President

Brian Sweeney – Vice President, Buick-GMC Sales

Kurt McNeil – Cadillac Vice President

Sue Yingzi Su – Senior Economist

Analysts

John Murphy – Bank of America/Merrill Lynch

Chris Ceraso – Credit Suisse

Brian Johnson – Barclays

Adam Jonas – Morgan Stanley

Colin Langan – UBS

Tom Krisher – The Associated Press

Melissa Burden – The Detroit News

Dale Buss – Forbes

Mike Colias – Automotive News

George Nelson – The Business Journal

Operator

Ladies and gentlemen, thank you for standing by and welcome to the April 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 Tuesday, May 1, 2012.

I would now like to turn the conference over to Jim Cain, GM Communications. You may begin, sir.

Jim Cain – General Manger, Communications

Thank you very much and good morning everyone. Welcome to the General Motors' April sales call. Leading our discussion today will be Don Johnson, our Vice President of U.S. Sales Operations. Before we do begin, I'll just remind everyone that the discussion will be covered under our forward-looking statements disclosure, which you can read in the press release. After remarks, we'll have our Q&A.

And Don, floor is yours.

Don Johnson – Vice President, U.S. Sales Operations

Great. Thanks, Jim. Good morning everybody. Thanks for joining us. As you’ve read by now in our press release, General Motors today is reporting 213,387 vehicles sales in April in the United States. Our retail sales were essentially equal to a year ago while total sales were down 8% versus April of 2011 and that was driven by a 25% decline in fleet sales and I'll give you a little bit more background on that fleet sales number in a minute.

Well, these are the absolute results. And as you think about the results, you are going to see clear evidence that we are still seeing good broad based sales performance across our portfolio.

Looking at the fleet sales in April which did have a large impact on the total sales year-over-year comparison, as we signaled last month during our sales call, our fleet sales were unusually high in April of 2011 and this was due to the timing of rental customer deliveries last year. When you look at the absolute reduction in year-over-year April fleet deliveries, it was about 19,000 units, and about half of that number, were vehicles that we no longer produce. So, what we have really done in 2012 is a smooth out the cadence more than we had last year on our fleet deliveries and we are still on track for our fleet sales for the year to average about 25% to 26% of our total sales.

Now, looking at our total sales, as I said we did see very good balance across most segments. We had a 7% increase for the Cadillac CTS Sedan. We had a 20% increase for the GMC Sierra pickup, a 9% increase for the GMC Terrain compact crossover, a 5% sales increase for the Chevrolet Silverado pickup, and a 7% increase for the Chevrolet Equinox compact crossover.

When you look at retail sales, in particular, our car performance continued to be very strong. Combined small and compact car sales were up 18% for the month and midsized cars were up 8%. In addition, when you look at what was driving a lot of that, Chevrolet, as a division, had its best retail sales month for passenger cars since cash for clunkers and April was the second best. So, March and April were the best months since cash for clunkers for Chevrolet retail passenger cars, a great performance there. And even outside, they are not adjusted for selling days and there is going to be a lot of dialog I expect today as we look at industry results about selling days.

When you adjust our sales force selling days, our total sales were up 3% and our retail sales were up 12%. Now, normally, we don't worry a lot about selling days, because that's usually 1, maybe 2, but this year, there were actually 3 fewer selling days including 1 fewer weekend. So, it is going to have a much larger impact on everybody's sales reporting. This is quite rare. In fact, this is only the second time in the last 10 years that this three-day variance has occurred. So, we did add a table in the press release, so you can see the impact, particularly on our retail sales.

Okay. Next what I'd like do is highlight a couple of GM's other new vehicles, the Chevrolet Sonic and the Buick Verano, because both continued to perform very well in the market. The Chevrolet Sonic total sales for the month were 38% higher than the car replaced and the Sonic is now firmly established itself as the number two vehicle in this segment in terms of volume. And that's a great performance by a new name, but more importantly, Sonic's ATPs are almost $1200 above the segment leader. Lot of ways when you look at Sonic’s launch performance, it is replicating their success that we saw with the Chevrolet Equinox as well as the Chevrolet Cruze. Just looking at the Equinox, it's been in the market for over 30 years and it still has the second highest retail share of its segment and the highest ATPs. When you look at the Cruze continues to sell very strongly with ATPs that are $1000 to $2000 higher than the segment leaders. So, great performance there, as I said, Sonic really following the footsteps of Equinox and Cruze.

On the Buick side, the new Verano is also launching very well. Sales have increased each month since the car went on sale in late November of last year and our dealers delivered almost 3000 units in the month of April. And about half of Verano sales are conquest sales and it’s really helping build a new image for Buick. In fact, according to (Polk), Buick is the only brand since 2007 to reduce its customer average age.

Now, in April, the strong retail sales performance of these as well as many of our other vehicles helped us to actually reduce our incentives by more than a $180 per unit compared with March and increased our average transaction price by about $150. And that’s according to J.D. Power PIN estimates. Now, we are obviously very pleased that the new products are giving us the ability to earn higher ATPs, reduce incentives, and grow share in key segments. We are equally disciplined around the net pricing in production of our older models as well and heavily continued to introduce more new vehicles this year and next. We fully expect that we’ll continue delivering high ATPs and competitive incentives on an ATP basis.

Okay. Now, before we open the lines for Q&A, I’d like to just briefly update you on our U.S. sales outlook for 2012. I think when you look back at the first few months of the year all of us have been presently surprised about how well the industry has performed when the light vehicle SAAR reached for the first quarter 14.6 million units. Now, despite some persistent headwinds that have come in and out of the market, whether it's the European debt crisis or some uncertainty around fuel prices, we continue to expect gradual improvement in the economy going forward.

With all of this in mind, we are increasing our light vehicle sales outlook from the 13.5 to 14 million unit range to a range of 14 million to 14.5 million. So, every time, we believe that strength in the manufacturing sector and strong retail sales will continue to lead to more job creation. That’s going to help more consumers put the recession behind them, gain even more confidence and drive vehicle sales higher for the both the industry and for GM this year.

So, having said that, let's turn now to the Q&A portion of our call. Joining us here today are Chevrolet Vice President, Alan Batey; Brian Sweeney, Vice President of Buick-GMC Sales; Cadillac Vice President, Kurt McNeil; and Senior Economist, Sue Yingzi Su. Let's open up and take some questions for you.

Question-and-Answer Session

Operator

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

John Murphy – Bank of America/Merrill Lynch

Good morning guys.

Don Johnson

Good morning, John.

John Murphy – Bank of America/Merrill Lynch

Just curious on fleet and your strategy there, are you seeing the rest of the industry sort of acting in a similar manner, what is a little bit of a pullback in fleet and sort of a flattening out through the course of the year or are you seeing some of your competition get a little bit more aggressive in the fleet channel and you just don't think it's worth chasing that competition?

Don Johnson

We have seen some more aggressiveness, particularly in the daily rental business from some of our competitors. I think if you look at some of the comments that have been made in the press some of that or some of the Japanese making good and some commitments from last year when the Tsunami hurt their production so well or so much. So, we are seeing some of our competitors with a higher percent of the business. What we are trying to do is rather than watching what they are doing is simply manage the balance between daily rental, between commercial, and between government? We are seeing year-to-date our daily rent business down a bit as we control still good business, but as we control light volume and we are really focusing on improving our commercial business. And we have seen that be up around 15% year-to-date. So, from our standpoint, I think our strategy is working well.

John Murphy – Bank of America/Merrill Lynch

And the decline in the Cruze is largely because of this fleet decline. Is that correct?

Don Johnson

That’s part of it, yeah. And of course don’t forget that April lot lower seasonality than March if you are looking at month over months.

John Murphy – Bank of America/Merrill Lynch

Okay. And then just on the full-size pickups and even the large uts, I mean, full-size pickups were up, but large uts were about flat, which is a reasonably good performance. Just curious what you are seeing in the buyer base there, is that a lot of retail, is that lot of commercial, who is really buying these trucks?

Don Johnson

Yeah, if you compare sort of the total number on full size pickups, as an example, up 9%. When you look just of the small commercial buyer, those sales were up about 16%, so that's again leading us to conclude that it is that small commercial buyer pent-up demand that’s really helping drive the pickup segment. The other thing is when you look at our heavy duties, we are gaining share in the heavy duties segment. A lot of that’s in the oil and gas services industry, so generally small commercial, heavy duties, in particular is what we are seeing.

John Murphy – Bank of America/Merrill Lynch

Okay. And then just lastly on the Colorado and Canyon, they had very good performance just well this month. Are you seeing those trucks pickup some share as others back away from the saying in particularly the range are you able to get a lot of conquest sales there on the small pickup side?

Don Johnson

I think we are picking up some sales there, but in particular, I know that our dealer who is stocking more of those vehicles and they are just very attractive to saying about the population.

John Murphy – Bank of America/Merrill Lynch

Great, thank you very much.

Operator

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

Chris Ceraso – Credit Suisse

Thanks. Good morning. Just a couple of items, on the pickup trucks, can you give us an idea of what your expectation is for the trajectory on inventories over the next few months and what your game plan is for incentives on those trucks as you balance out your downtime on production?

Don Johnson

Yeah. As we've talked in a number of occasions, we are matching our supply with our demand. One of the things impacting our supply are the down weeks we have talked about. So, as we get into Q2 and Q3, where more than 50% of the down weeks are you will start to see the pickup inventory I will say come down marginally, but again, we're going to keep it in line with where we see demand going. As we look out in demand and we talked about this a year ago and we expect the same thing is going to happen this year that the full size pickup segment as a percent of industry will start to grow. First quarter is always weaker, so we expect that’s going to grow for the rest of the year. And we believe that we will have the right level of inventory mix to meet that demand. As far as our incentive plan that will largely depend on what the competitive environment holds for us. So, I guess nothing specific directionally to give you on that other than we’ll continue to be competitive in the market.

Chris Ceraso – Credit Suisse

Okay. And then just a question on Buick, the Regal looks particularly weak, was that a comparison was it fleet, is it Verano? And then can you just tell us what the penetration is of the eAssist powertrain on the LaCrosse?

Brian Sweeney

Yeah. I can – it's Brian Sweeney. I can jump on the Buick question. Verano had its best months since launch almost 3000 as Don said, but we have definitely unique customers looking at those buying Regal and Verano. So, Regal, we are doing pretty well almost 10% of our mix was GS, well over 20% is Turbo, so we're just – we are starting to see that. So, it's really appealing to a different customer Verano and Regal and then eAssist has been doing very good on the cost. It represented 26% of our sales up slightly from where we were last month around 24, 25.

Chris Ceraso – Credit Suisse

But the big decline in the Regal, what explains that?

Brian Sweeney

We don't necessarily see a decline other than Verano is coming in and we are appealing to two different customer bases there. So, it's not really a question of where we went to fleet or just what's happening in the showroom as Verano ramps up.

Chris Ceraso – Credit Suisse

Okay, thank you.

Operator

Our next is question from the line of Brian Johnson with Barclays. You may proceed.

Brian Johnson – Barclays

Yes. So, how do you expect the pace of pickup truck sales to grow over the course of the year and is this month when you look at your relative performance evidenced about two things, one, that may be some of the gas price fears are beginning to abate and picks up are coming back. And two, you seem to have outgrown at least one other major competitor, it was the opposite last month. Is this just the normal month-to-month or did you kind of reboot some things around GMC and Chevy marketing and the pickups?

Don Johnson

No, I mean, Brian, the cadence that we've seen this year is largely what we had forecast and largely what we saw last year. There is no doubt that some of the uncertainty this year on gas prices caused some pickup in tenders to sit on the sidelines. So there is a bit of volatility in sales as gas prices have been volatile, but with gas prices stabilizing. Coming down a bit, the most importantly stabilizing, we think that pent-up demand will continue to a release into the market in addition to the seasonality that we always see. So, we see the full size segment this year growing to – I'll say roughly where it was last year may be a little bit less based on our outlook that we are not going to see a $2 increase in price of gas. When you look at the history, when you look back at what happened last year, very similar dynamic to what we see this year. Gas prices didn't spike as high in the year last year, but the dynamic is fairly similar and we expect that to play out again '12.

Brian Johnson – Barclays

Okay, in terms of your performance within the segments.

Don Johnson

We're seeing good strength in heavy duty and we are seeing forecasted strength in light duty. So, overall we're feeling pretty good about our share of the segment.

Brian Johnson – Barclays

Okay and when you said about the same as last year, did you mean as a percent of total sales or did you mean?

Don Johnson

Yeah.

Brian Johnson – Barclays

Unit sales of pickups.

Don Johnson

As a percent of total sales.

Brian Johnson – Barclays

Okay. But do you think anything to sort of reserve the sales issues of last month or did you not see those as sales issues.

Don Johnson

As an example, we were advertising our truck month in March this year. We did the same a year ago so, nothing unusual this time of year.

Brian Johnson – Barclays

Okay, thanks.

Operator

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

Adam Jonas – Morgan Stanley

Thanks, hi, everybody.

Don Johnson

Hi.

Adam Jonas – Morgan Stanley

Question on the channel you are selling too. Can you tell us the past month what percentage of your business was the sub-prime versus we think or any other way you got it.

Don Johnson

Yeah, our percentage of sales to subprime last month was around 9% and that compares to an industry based on our data we have about 6.5%. Leasing, we are running at just under 14% with the industry running at about 19.5%.

Adam Jonas – Morgan Stanley

And the other same number sort of previous year.

Don Johnson

For the month, yeah, for the month.

Adam Jonas – Morgan Stanley

Yeah.

Don Johnson

The year ago on sub-prime, we were running about seven. So, we've increased that by two points. Industry was running about 5.5. So, industry has gone up one so, on sort of an index basis, we are increasing our share of sub-prime finance business, again, no surprise. And then on lease, we were about even to April of last year and the industry was about even so, the leasing landscape hasn't changed that much.

Adam Jonas – Morgan Stanley

I am kind of surprise by that given how used car prices have developed. How much of your sales had been heard by not having the capital leasing business for the past three or four years? Because my understanding is it is not so much that your market share or sales have been heard by not having it today. But it's more of the anniversary are not having it over the past three years and I am not getting any really zero off-lease business coming in right now. Anyway, you have thought – I can share with us maybe how much that might be a depressing the share in real time?

Don Johnson

Yeah. I mean, no impact today based on our consumer financing strategy today. As we went through our tough times three years ago, it had less to do with whether we had a captive or not, but simply given our financial situation, we were in a position to lease as many vehicles as in previous years. That doesn’t mean that there are fewer less lease coming off with ease around this time, but we have a number of segments that we compete in, where lease penetration is very low. Therefore, we have never had return in lease – less lease and we have done very well in those segments, so hard to quantify it. The good news is we have used vehicle prices being strong that whether a customer is in a lease or a finance contract. Many customers have equity in their current vehicles, which I think provides a great opportunity to put them into a new vehicle.

Adam Jonas – Morgan Stanley

Great, thanks a lot.

Don Johnson

Okay.

Operator

Our next question is from the line of Rod Lache from Deutsche Bank. You may proceed.

Unidentified Analyst

Hi, good morning. It's (Dan Gilson) for Rod today. Can you hear me?

Don Johnson

Yes.

Unidentified Analyst

Okay, okay, great. It looks like market share recovered really strongly in April versus March levels and just wanted to get a sense if there was anything. Specifically, you can point to, it didn’t seem like pricing deteriorated at all, was there anything regionally or retail versus fleet or specific segments that really drove kind of a recovery in market share from a pretty weak level in March?

Don Johnson

Nothing specific other than really to believe we stuck to our plan. We got broad-based sales performance as I said across our segments we did. We did see the months strengthened in the last few days, which clearly helped us, but we were maybe a little bit higher share voice out later in the month as well. But I can't point to any one big hot silver bullet that did it, I think it's again a matter of consistency and sticking to the game plan. There is always going be volatility month-to-month. We have to remember this industry as much as we like to talk about on a monthly basis is longer term in just 30 days.

Unidentified Analyst

Yeah, absolutely. And just two house-keepings, do you have an estimate for full-size pickup as a percent of the overall industry, so industry full-size pickup sales as a percent of the overall industry sales in April? And also can you tell us how the penetration of the Malibu Eco – of total Malibu sales right now? And when do you expect to launch the rest of the new Malibu powertrains?

Don Johnson

Yeah. I'll let Alan talk to the Malibu situation, but on the full-size pickups partly through the months when we had data, I'll say to the first 20 days it was running sort of 9.5%, but typically its strength is near the end of the month. So, a little bit on our final data, we expect it will be high 9s could yet can, but probably high 9s when the month is all said and done.

Unidentified Analyst

And is that retail only?

Don Johnson

Yes, that is retail only, because we don’t have any enough data on total.

Unidentified Analyst

Okay, got you.

Don Johnson

And then Malibu, the non-eco version will be in the summer that will be the Ecotec four-cylinder as well as the turbo and we sold in April 1600 Malibu Ecos.

Unidentified Analyst

Okay, thanks very much.

Operator

The following question will conclude the analyst portion. Following this question, we will proceed with the media portion of the question-and-answer session. (Operator Instructions) The next question is from Colin Langan with UBS.

Colin Langan – UBS

Great, thanks for taking my questions. Just a couple of quick questions. Can you comment on your rental fleet mix for this quarter, I am not sure if I missed that? And can you also provide any color on sort of your retail SAAR as a percent of the total SAAR was, the fleet very high for the total industry this month? And just lastly, could you give some color on the cadence of SAAR throughout the rest of the year, it seems to imply that Q2 might soften a bit and do you expect to start to pickup in sort of the midway through?

Don Johnson

Boy, three questions, I'm glad, I rolled them down quickly. First of all, if you look at rental as a percent of total rental in April was 15.5% down from 21% a year ago.

Colin Langan – UBS

Okay.

Don Johnson

If you look at retail SAAR on a light duty basis, it looks like it's going to come in around 11.5 million units.

Colin Langan – UBS

And what was that compared to last month?

Don Johnson

Last month as you see that – last month it was 11.8, so virtually identical.

Colin Langan – UBS

Okay.

Don Johnson

And then outlook for SAAR for the rest of the year, right now we see it being as you look over the next few months, we see it being relatively flat, I'll call it, sort of mid 14 million. One of the things that we are still trying to calibrate on I think everybody is, is of the things that were a little bit unique in the first quarter what was the total impact of those and what will we see the rest of the year. So, that’s why we are calling the range for the year at 14 to 14.5. Next couple of months, I think will be a repeat of the March/April trend. After that, I think we’ll have to see what kind of strength the economy actually gets under foot.

Colin Langan – UBS

Okay, alright, thank you very much.

Don Johnson

Okay.

Operator

Our next question is from the line of Tom Krisher from The Associated Press. You may begin.

Tom Krisher – The Associated Press

Hi Don.

Don Johnson

Hi, Tom.

Tom Krisher – The Associated Press

Starting with Chrysler and Volkswagen, I'll have pretty significant sales increases and they were faced with the same number of selling days and what not are they taking sales from you guys?

Don Johnson

We haven’t look specifically across sales with them, but for those competitors, they had a pretty low base last year. So, I think you have to look at it on a longer term trend before you can assess the strength.

Tom Krisher – The Associated Press

Okay. So, you don’t see this as being necessarily a reshuffling of sales with the Japanese fully back into the market now?

Don Johnson

There is no doubt the Japanese are back in the market. They got a high inventory. They are particularly being aggressive in the fleet business, but we are going to maintain our competitiveness in the market.

Tom Krisher – The Associated Press

Okay. And then lastly for Cruze, it was almost a 28% drop, but yet a really good month in April last year over 25,000. How much of that you mentioned that part of it would have been the fleet, the timing of fleet deliveries, but how much of it with retail and where are those buyers going?

Don Johnson

Yeah, I think, again with Cruze, what you have to look at is Cruze on an annualized basis rather than just on the single month, we had a really good Sonic month, we had a really good Malibu month at retail. As I said, when you look at our total small and compact sales, we were up at 18%. We really want to look at the total. Chevy had their best passenger car sales, our second best in cash for clunkers. So, when you put all of those arrows in the quiver and the showroom we’re pretty happy with our sales.

Tom Krisher – The Associated Press

Okay, very good. Thank you.

Don Johnson

Okay. Thanks Tom.

Operator

Our next question is from the line of Melissa Burden with The Detroit News. You may proceed.

Melissa Burden – The Detroit News

Excuse me, hi and good morning. I had a couple of questions. One is to ask a little bit, you may mentioned in the release about the Volt, and excuse me, being some potentially limited availability in California. And I was wondering if you could provide a little bit more color on particularly is there some shortage there in California if you could say how many of concentrative sales overall in California and then two with the fleet versus retail mix would be on that?

Alan Batey

Yeah, this is Alan Batey. Let me give you some color around this. Total Volt for the month came in at 1462. To put that into context, that's actually the second best retail sales month since we launched. Out of that total, only, let me call the month before, about only 54 was sold to fleet. You are correct with regards that they supply actually in California we ended with only 8-day supply on the ground. So, yes, we are very, very tight on inventory and we’re seeing sales all in the retail piece of the market and very strong.

Melissa Burden – The Detroit News

Okay. So, you said you ended it with an 8-day supply in California, how does that compare with nationally and would you be able to give any, I guess, additional color on maybe where sales were strong.

Alan Batey

Nationally, we ended on 2,800 units, which is about a 48-day supply. Yeah, that the sales are particularly strong in the west as you’ve highlighted, most I've seen some good sales in the Washington area as well as in the Northeast/North Central. So, we're seeing best sales in those areas.

Melissa Burden – The Detroit News

Okay, thank you.

Operator

Our next question is from the line of Todd Lassa with Motor Trend. You may proceed.

Todd Lassa – Motor Trend

Yeah, good morning. Thank you. Could you talk a little bit about the Malibu Eco sales? Are there any significant numbers of those being sold out of the Malibu total given that's the new model?

Don Johnson

Yeah, there were, I think as we reported there were 1,600 sold out of the total of about 2,200 Malibu. So, clearly as we win those two in parallel, we'll see that the performance looking forward to be new Ecotec and turbo version coming in.

Todd Lassa – Motor Trend

Sorry, I guess I miss that number, 1,500 last month for the Eco. And could you tell us where your current market share is and I apologize if I missed this one too market share is compared with last few months. Do you have any estimates of where you are right now?

Don Johnson

Yeah, we are still waiting for the rest of the industry to come in. We certainly expect that our market share is going to be – let me grab my historical chart here.

Todd Lassa – Motor Trend

Yeah, we are...

Don Johnson

We think the market share is probably going to come about in line with what we saw in the first quarter.

Todd Lassa – Motor Trend

Okay, which was, I mean, what that was.

Don Johnson

It's about 17.5%.

Todd Lassa – Motor Trend

Okay.

Don Johnson

One other quick one, is this the first month that that Volt outsold Corvette?

Todd Lassa – Motor Trend

I am going to have to go back in the archives for though, I don't know.

Don Johnson

Okay. Well, you can get back to me if you would like, thanks.

Todd Lassa – Motor Trend

I will get Jim to get back to you.

Operator

Our next question is from the line of Dale Buss with Forbes. You may proceed.

Dale Buss – Forbes

Hi. Gentlemen, I wanted to ask, Alan, if Sonic success, you think has had some impact on the trouble that Ford is having selling Fiesta? And then I have one more question please.

Alan Batey

I hope so, but I don't have any data to support that. All I know is that we have got now a portfolio of passenger cars like we never had before. And as Don mentioned we had a fantastic performance in March, which was the best since Cash for Clunkers in August 2009, and then in the last month, it was the second best since Cash for Clunkers. The early index that we had was actually showing that Sonic, those having a terrific month and in fact the data that I show, but it only actually took it through the first couple of weeks of the month is actually put us in the number one spot. So, we will see how that plays out when the data becomes official, but we are very happy with Sonic and really happy with the way the portfolio is actually working together.

Dale Buss – Forbes

Thanks. The other question I had is for one of the luxury brand gentleman, how do you see luxury sales lining up vis-à-vis general market sales for the year. Last year, luxury trailed in terms of the percentage of the market – the general market, how do you see that shaping up this year for the entire market?

Kurt McNeil

Yeah, this is Kurt McNeil. Luxury as a percent of industry has been down about a percentage point year-to-date. I think a lot of that, one of the gentlemen asked earlier about returning lessees. We weren't the only ones that had that phenomenon when leasing one away a couple of years ago. So, luxury has been a little weak, but we see that coming back it might take a little bit, but we still see it coming back. The other luxury makes have been very aggressive in the marketplace. Their incentive spent anywhere up from anywhere from 10% to 50%. So, they are out spending money. Obviously, a lot of great entries in luxury space so, we see it coming back or right now it is a little weak as a percent of industry.

Dale Buss – Forbes

Alright, thanks.

Operator

Our next question is from the line of Mike Colias with Automotive News. You may proceed.

Mike Colias – Automotive News

Yeah, thanks guys. Don, I know you've been open on these calls about plans or the truck plans in the schedule downtime for the changeover to the next generation. I am wondering how you've communicated those plans to dealers, I mean, presumably you are going to have a period of several months, where they've got bigger inventory of pickups than you'd normally have and they have to fore plan those? And then some dealers are wondering what happens when the plants do go down, what they can expect then? So, what have you told them?

Don Johnson

We have basically told them exactly we told you. W said 29 down weeks, majority is in Q2, Q3, and the dealers get it. They are pretty comfortable with their inventory now. And as we talked to them about our forecast for the year, so that they can plan, see, and only communicate with them regularly, but what we have told you certainly is what we have told them.

Mike Colias – Automotive News

Okay. And what are you seeing in terms of incentive landscape and pickups, I mean, any color what your competitors are doing?

Don Johnson

Yeah. I mean, hard to say that, look – if I just look at the present in the recent past, other than some competitors have got a little bit more aggressive than we might have expected, but hey it's competitive world out there. I would say nothing radical.

Mike Colias – Automotive News

Okay, thanks.

Operator

Our final question will be from the line of George Nelson with The Business Journal. You may proceed.

George Nelson – The Business Journal

Yes, going back to the Cruze sales, I was wondering if there is any fact you could point to for the drop of year-over-year for the month and if that causes you any kind of concern regarding the make?

Don Johnson

Well, I guess the simple answer is it doesn't causes any concern as I noted. You have to look at the trend over a longer period of time than a single month. When you look at the arrows that AAA has in their quiver, I know Alan is pretty pleased with what's been happening.

Alan Batey

Yeah, this is Alan Batey. Look the compact cost segment is obviously a very competitive segment. What we have done from day one is to really position Cruze from a value perspective, because it does offer incredible value for money, but as some of the Japanese are coming to the market, we remained extremely disciplined with regards to I'll approach to that. And if you take a look at the pin data through April 20, because that’s basically the latest data that we have and you look at a vehicle like Toyota Corolla and you have a look at their average transaction price at 16,917 and you compare that with the Cruze of 19,572, you can see that we are not getting drawn into a discounted sales position. We are driving great sales with great retail penetration, because people have seen the value in our product and we are committed to do that for the long haul. So, we are very happy with the way our portfolio is working together with now Sonic, Cruze, and Malibu working together across the three most important segments in the passenger car market.

George Nelson – The Business Journal

Okay, thank you.

Operator

Mr. Cain, there are no further questions at this time. So, I'll turn the back to you.

Jim Cain – General Manger, Communications

Thank you for joining us everybody. If you have any additional questions you can contact me in the office this afternoon. Thank you.

Operator

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

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