What Is GM Doing RIGHT With The Tahoe That It CAN'T Get RIGHT With Its Other Products?

If you're an investor, you already know 'tis the season. Earnings season, that is.

This week General Motors reported its earnings and it missed in a pretty big way. I didn't though as I shorted the stock and made a few bills on the company's unfortunate news. While there were plenty of excuses from a strong dollar to a new business model in Russia to poor business in Europe and South America, there was one bright spot.

That, my friends, would be the Chevrolet Tahoe.

Taking a snippet from the Yahoo Finance story, check this out:

The success of the Chevy Tahoe

The Chevy Tahoe tells the story. Redesigned for 2015, this full-size SUV sells for roughly $50,000, on average, with no rebates or incentives available -- usually a sure indicator of a popular vehicle in high demand. Mileage is a painful 18 MPG, but with gas at $2.50 or so, who cares? During the first three months of the year, GM sold about 21,000 Tahoes, up 33% from last year. Automakers can easily earn $15,000 in profit on each large pickup or SUV, which makes the Tahoe an indisputable winner for GM.

The biggest problem we've said GM has is it doesn't really have a volume product aside from the Silverado pick-up truck. Sure, the Equinox moves a decent amount of units and the Cruze does OK — most of it going into rental fleets. After the 2015 New York Auto Show, we're pretty sure the all-new Chevrolet Malibu will not eat away at the market share owned by the Honda Accord, Nissan Altima or Toyota Camry.

So, I have to ask: What is GM doing RIGHT with the Tahoe that it CAN'T get RIGHT with its other products?

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jeffgall - 4/25/2015 9:18:13 AM

+1 Boost

Nothing terribly special. It's an ok product, but it tries mainly because a lack of competition in the segment. GM pretty much owns the full size SUV segment because of this. If you want space and the ability to tow a boat, there are few options these days without getting a pickup. GM has does just enough with this and the Suburban to keep it current, while Ford has not done the same with the Expedition.

PUGPROUD - 4/25/2015 9:21:37 AM

+2 Boost

Size counts!

skytop - 4/25/2015 9:20:50 PM

+2 Boost

$60,000 for that ugly while whale? Never going to happen!

TomM - 4/25/2015 10:18:34 PM

+3 Boost

This is simply a case of GM being in the right place at the right time.

Ram does not really compete in this segment - and the warmed over Ford offerings are really really old designs.

The Chevy trucks are quiet - smooth riding - and offer decent power for the segment - and are relatively new compared to anything else.

AS long as gas stays below $3 a gallon - the mileage will not be a factor - since people who use these as tow vehicles are already accustomed to poor mileage.

However - MOST of CRUZE sales are retail sales. and when you talk FLEET sales - you must separate sales to corporate fleets - from those sold to rental car companies - they are not the same.

MDarringer - 4/26/2015 11:21:56 AM

0 Boost

As TomM said...Part of the reason why the Tahoe does so well is that FCA doesn't really have a competitor. The Durango is not comparable. Ford's Expedition is OLD with much of its architecture dating back to the original. Sure they threw on IRS and did some styling updates, but the vehicle is outdated. Thus GM--in a very real way--has the market to itself.

Also, the demographic of the buyers of these vehicles skews toward a "buy American" ethic, which axes the Armada and Sequoia.

leej - 4/27/2015 9:05:27 AM

+1 Boost

White whale is right! A lady comes by our local school to pick up her child in one of these things...she can barely climb in and out of it. I couldn't help but thinking that if it were painted school bus yellow, some kids would mistakenly get in it instead of their regular bus.

dumpsty - 4/28/2015 11:38:32 AM

+1 Boost

The Tahoe/Yukon have been popular not only b/c of their versatility & history....but also b/c they comfortably sits in the "cool" shadow of the Escalade. The big Caddy SUV is GMs halo vehicle for all of its large SUVs & all of the related products benefit from that. People walk in the dealership thinking about the halo vehicle but usually end up driving away with something else. If more consumers could afford the M-B GL, they'd be buying them as fast as they're made.

Aside from fuel prices in the US, it's just a big, strong, roomy vehicle that fits the needs for a lot of different consumers for a lot of different reasons....at affordable pricing (almost). OK, the newest versions are absolutely huge - they are now the size of the Ford Excursion - which as a mammoth when it was last sold. So having a full-size SUV isn't so important these days. Ask GM to develop SUVs to compete in the most competitive market - mid-sizers - and that's where GM isn't all that "hot". There's too many choices, which so many options, and they all cost major coin.

Your best can't be cheap or even look inexpensive. When you've got consumers willing to pay more for their car/SUV/truck (per month) than they pay for their apartment/condo/house, the competition is more than just other automakers.