GMC expects record sales of Sierra pickups as it struggles to keep up with demand

A GMC Sierra 1500 pickup on the assembly line at the General Motors Fort Wayne Assembly plant in Roanoke, Indiana. The shortage of semiconductors has led to the closure of production of the popular truck. (Ryan Hake/General Motors/TNS)

GMC is on track for record sales of its Sierra heavy-duty and light-duty pickups this year despite continued thin inventory amid a global shortage of semiconductor chips.

The shortage of chips, which are used in a variety of vehicle parts, has crippled the auto industry’s production. But General Motors has managed to keep its truck factories running, for the most part, throughout the crisis.

“We’ve done very well. We think we can still have an all-time sales record for the Sierra,” Duncan Aldred, global vice president of Buick GMC, told reporters on Tuesday. “When we get chips, we usually put them in the Sierra and Yukons and we’ve gotten pretty good through it (the chip shortage) this year. We expect an improvement next year.”

At the turn of the year, GM expects to restart its Oshawa Assembly plant in Ontario where it will assemble the Sierra and Chevrolet Silverado pickups. GM currently builds the vehicles in three other plants in North America.

But Aldred cautioned that GMC dealers will still operate on a supply-to-order basis for pickups because demand will outstrip supply for a while.

Despite the chip challenges, Aldred said Tuesday more than half of GMC dealers have signed up to install electric vehicle chargers and pay for other equipment needed to sell the 2022 GMC Hummer EV pickup that is on schedule to hit the market year after year – the end.

Fast Selling Sierras

At Sellers Buick GMC in Farmington, Mich., owner Sam Slaughter said his shop is selling Sierra pickups at the fastest rate he’s seen in recent history.

“We sell every one we get and most of them are sold in advance because people want to notice what Sierra they can get,” Slaughter told the Detroit Free Press. “Most of them are AT4, Denali and Elevation, the high-end trims.”

The 2021 Sierra AT4 light-duty pickup starts at $54,700, the Denali at $55,800 and the Elevation at $43,100.

In the third quarter, GMC’s Sierra light- and heavy-duty pickup sales were down a combined 22% to 52,774 compared to the year-ago quarter. But for the nine months ending in September, total Sierra sales rose nearly 10% to 191,186 over the previous year.

For the full year 2020, GMC sold a total of 253,016 Sierra pickups, a 9% gain over 2019, according to GM.

The next biggest seller in GMC’s lineup is the Yukon, which had a 24% sales increase in the third quarter to 17,428. Through September, Yukon sales were up a whopping 55% to 59,743.

“Vehicles for all customers”

The chip shortage is partly a result of the covid-19 pandemic as demand increased for personal electronics, which require the chips. The chip makers prioritized production for that industry over the less profitable chips that go into car parts.

GM and its urban rivals, Ford Motor Co. and Stellantis, have each had to pause production or build vehicles just off the chip parts and then wait for the parts to arrive before completing the vehicles. Southfield, Mich.-based consulting firm AlixPartners has predicted that automakers will lose production of 7.7 million vehicles this year, costing the global auto industry $210 billion in revenue.

Most dealerships are barren of new cars. Customers face long waiting times and higher prices. Still, Aldred said, GMC will not cut production of lower-trim models — which are less profitable — to streamline production.

“I think we’re through that phase, if you have a plan to deliver an all-time sales year,” Aldred said. “A central part of our mission is to provide a vehicle for all customers.”

“Hand-to-mouth”

Aldred said he anticipates chip availability will improve next year and help boost production of a variety of trim levels.

GM builds its Sierra and Silverado light-duty pickups at the Fort Wayne Assembly in Indiana and the Silao Assembly Plant in Mexico. It builds the heavy duty versions at Flint Assembly.

At the turn of the year, GM will start Oshawa Assembly, but Aldred declined to say how much more volume GMC will get from Oshawa.

“I won’t put a number on it, but an additional facility capacity for heavy and light trucks is a big advantage for both GMC and Chevy,” Aldred said. “We’re basically operating on no physical inventory of the heavy and light Sierra right now and are operating on a ship-to-order model. But even with the added capacity, we won’t be able to build inventory on a dealer basis.”

That’s because demand for pickup trucks will exceed production.

Slaughter said customers have been patient, but he likely lost some business to a rival dealership that had a vehicle in stock that he didn’t. Then again, he’s probably won business from others for the same reason, he said.

“I don’t know when we’re going to see more volume,” said Slaughter, who also owns Sellers Subaru in Macomb Township, Mich. “At Subaru and GMC, we literally sell from hand to mouth every month everything we can.”

Lobster ready

Early Tuesday morning, a crew was busy installing more charging stations at the Sellers Buick GMC store, which already has two chargers. The dealer will have five chargers in total along with a special lift for its service location next month.

Everything is being prepared to sell the 2022 Hummer EV and 2023 Hummer EV SUV when they arrive in two years.

“We have about half a dozen of the first edition Hummers coming in, but no firm dates,” Slaughter said. “We’ll know sometime in the next two to three months. GM did a pre-order, so they’re already sold. We have orders for the non-first edition, the regular Hummer, and a bunch of orders for the SUV coming in 2023.”

Aldred said more than half of GMC’s U.S. dealers have signed on to sell Hummer EVs. Like Slaughter, they are upgrading their facilities to do so. GMC has awarded upgrades in phases based on the production ramp-up of the Hummer being built at Factory ZERO in Detroit and Hamtramck.

“Some dealers won’t get their Hummer until sometime next year, for example, so it’s not necessary for the dealer to spend the money to be ready for it now,” Aldred said. “Everyone is completely on track and every dealer will be ready before they get their Hummer.”

2020 GMC Sierra 2500 HD Denali

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