A Pickup Pick-Me-Up

Chevrolet Silverado

Image from: Silverado / ConceptCarz.com

November’s numbers are in, and GM’s Chevrolet Silverado was faced with 100+ days’ inventory at the end of the month; 60 is generally considered a healthy supply. An AutoNews article outlined GM’s plans to increase incentives by as much as $2,000 in customer cash to get those excess trucks off the lot. Typically, higher incentives lead to higher conversion. But, is that the best move?  Is it low conversion that’s currently inhibiting sales?

There are two factors that drive sales: demand and conversion.  Demand is the number of unique in-market shoppers for a vehicle; it is often driven by ad spend, competitive spend and consumer confidence.  Conversion is similar to a close rate, and is the ratio of total sales (in this case, fleet and retail) to shoppers.  Conversion can be hindered by tight supplies, sub-optimal mix, and uncompetitive incentives.

To assess whether adding incentives is the best move, Compete reviewed Silverado’s demand and conversion, and then benchmarked Silverado’s performance against F-150 and Ram.

This analysis leverages Compete’s proprietary in-market automotive shopper metrics, which are based on unique consumers (i.e., no double-counting of consumers doing the same activity more than once in the same month). Those metrics in turn leverage Compete’s patented normalization technology. Shopping behavior is based on lower funnel shopping activity (e.g., request a quote) on key shopping areas for any of the 40+ 3rd Party online automotive sites that Compete tracks.

Demand

Over the past 13 months, Silverado has lost shoppers overall, and relative to F-150.  In November 2011, F-150’s advantage over Silverado was 10,000 shoppers, but by November 2012, that advantage was doubled.

Model Shopper Counts for Silverado, F-150 and Ram

Conversion is based on total sales (i.e., both retail and fleet).  Ram has the highest conversion in the set; therefore, Ram drives its sales with conversion, not demand.  Silverado and F-150 conversion has been nearly identical, which suggests that Silverado doesn’t currently have a conversion disadvantage.   In November 2012, F-150 had higher conversion than Silverado, despite Silverado offering more incentives (table).

Conversion by Model

Incentives/New Vehicle Sold, via AutoData Nov 12

Looking Ahead:

  • Due to the tremendous amount of fleet vehicles sold among these models, first repeat the analysis using retail sales only, and account for seasonality
  • Investigate how the F-150 has higher conversion than Silverado, despite lower incentives
  • Monitor the effectiveness of Silverado’s increased incentives on driving conversion
  • Evaluate Silverado reverse cross-shop to identify and leverage potential sources of spillover demand
  • Identify cost effectiveness of Ram’s high conversion/lower demand approach
  • Analyze how Ram’s 2013 Motor Trend Truck of the Year award impacts demand and conversion going forward
About Leslie Griffin:
Leslie Griffin is a Client Services Associate in Compete's Automotive department, analyzing Compete data to provide marketing insights to the auto industry. Before Leslie joined Compete in 2012, she was in the digital ad sales department in the Motor Trend Automotive Group. Connect with Leslie on LinkedIn.