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Although GM is reporting huge profits and profit estimates, they are still cutting more corners and pushing back order dates. GM announced this week that fleet order dates are moving back again. As of now 2022 model year Chevrolet Tahoe/Suburban, GMC Yukon/Yukon XL, Cadillac Escalade/Escalade ESV, as well as the HD Full-Size Pickup Trucks, and Mid-Size Pickup Truck order dates have moved back another week to August 19th. Full-size van and 1500 pickup order dates were pushed back to September 2nd. Again, we have no reason to believe these dates will hold true as we have lost count of the number of announcements from the auto manufacturers that have been wrong.
On top of these dates continuing to be pushed back GM also announced that they are removing more features from certain vehicles to cut down on the number of microchips needed to produce them. The previous 2 weeks videos discuss the auto start stop and wireless charging features being removed from some GM vehicles. This week they are announcing a few more affected features. 2022 Buick Encore GX models will no longer have side blind zone alert and rear cross traffic alert as standard equipment. Also, GM will be removing the digital temperature display on the climate control knobs for certain 2022 model year Chevrolet Silverado 1500, and Colorado and GMC Sierra 1500, Canyon, Acadia, and Terrain.
Ford’s CEO, Jim Farley, in my opinion, let some of their future plans slip and in an interview with Reuters this week. He was talking about a shift in the way people buy vehicles and how Ford is going to move away from stocking vehicles at dealerships and moving to a model where customers order the vehicle they want. He said, “We are really committed to going to an order-based system” and “I know we are wasting money on incentives”. I’m sure this has dealerships across the country scrambling as this model would be a big step in auto manufacturers cutting dealers out. Dealership agreements and contracts have protected the auto dealers in the US from being replaced by direct sales models like Tesla and Apple, but the pandemic looks like the perfect opportunity for gigantic corporations to make huge changes and break contracts because of the easy scapegoat and the lack of accountability if you yell Covid did it.
Fleet purchases are also going through a period of change. Manufacturers are now in a position to pick and choose who limited inventory will be going to. With fleet purchases being lower margin on average than retail, manufacturers are taking advantage of the higher margins. Fleet incentives are also negotiated for an entire model year at one time where retail rebate can be changed at any time. Retail rebates have pretty much dried up with the inventory but fleet rebates are guaranteed for an entire model year. This explains why fleet vehicles have curbed for a while and the new fleet incentives coming out for the new model year are down from last year. Combine this with a price increase, pretty much coming across the board from the manufacturers, you can see that there are some big changes in the auto industry.
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