By MARY PATRICK
General Motors announced the release this month of updated versions of its popular SUV brands, seeking to stay ahead of a bevy of competitors.
The car company – now four years removed from bankruptcy – is offering new versions of the Chevrolet Tahoe, Chevrolet Suburban and GMC Yukon. They will be available for purchase by the first quarter of 2014.
General Motors, on its website, also reports that advanced engine technology allows the new line of SUVs to get better fuel economy, even with a V-8 engine.
The automotive industry – lucrative and highly competitive – is an interesting sector of the economy to watch for business students or those thinking of going to college for a career in business.
General Motors continues to dominate the SUV market, with 74% of all SUVs sold made by the company. But the competition is fierce – including the Ford Expedition, Nissan Armada and the Toyota Sequoia.
Dan Ammann, chief financial officer and executive vice president for General Motors, said that being the leader simply means that General Motors must work harder.
“This is an important and profitable segment and we have set the bar high,” said Ammann in a statement released by General Motors.
Sales of SUVs are down from the peak years of 1995 and 2005, when lower gas prices drove sales higher, according to a report from Reuters. SUVs now face competition from crossover vehicles which work like a utility vehicle but handle more like a car and generally gets better gas mileage.
John Schwegman, the executive director for U.S. truck product and pricing for General Motors, said that the sale of full-sized SUVs has dropped from about 600,000 annual sales a decade ago to about 250,000 to 275,000 a year.
According to Reuters, even with the lower sales numbers, the profits to be made on SUVs are too large to ignore. General Motors makes more than $12,000 per vehicle when selling full-size trucks and SUVs, Reuters reported.
Sales from those two vehicle lines make up 60% of the company’s profits, according to Reuters, which also reported that Citi estimates General Motors could make $1 billion in additional earnings in 2013 and 2014.
General Motors has revamped about 70% of its product line since receiving a $50 billion bailout from the U.S. Treasury in 2009.
Autodata Corp. reports that sales are up for all the General Motors brands getting updates – 22% for the Chevrolet Tahoe, 4% for the Chevrolet Suburban and 24% for the GMC Yukon. Meanwhile, sales were down for the Ford Expedition and Nissan Armada.
