elegant· Senior Member
Discussion Starter · #1 ·
This is a StingRay review, but from a very distinct/different perspective, a "business" analysis review of the car. It was conducted by "The Motley Fool." For those who think that that company, by virtue of its name, isn't a first rate financial investment firm, nothing could be further from the truth. Here is their analysis of how the Corvette, which accounts for less than 3% of GM's sales, will be a good GM "moneymaker." It's title is: "2014 Corvette StingRay Steps On The Gas."
As the first new Corvette to arrive since 2005, the 2014 Corvette Stingray was almost certain to have strong initial demand. The car's great reviews have further bolstered its appeal . As a result, the new Corvette has gotten off to a strong early sales pace.
Corvette sales soar:
The Corvette has not been a big seller in recent years. With persistently slow economic growth and relatively high gas prices, many car buyers have shifted toward more practical cars. In 2011, GM sold just 13,164 Corvettes. Last year was not much better: the company sold 14,132 Corvettes in 2012 .
Through the first nine months of this year, sales slumped again, and GM sold just 7,830 Corvettes . But the 2014 Corvette Stingrays started to arrive on dealer lots in September and October, and the result was a monster sales month: GM sold a stunning 3,929 Corvettes in October .
This stellar performance should continue for the next several months, if not longer. GM is still working to build up inventory of the 2014 Corvette Stingray, and some dealers may not have received any of the new models yet. Furthermore, the convertible version will not go into production until near the end of the year. For each version, it will take at least a few months to meet the pent-up demand.
A profitable niche:
No matter how strong the demand is for the 2014 Corvette Stingray, it will never produce the same sales volume as the affordable cars in the Chevy lineup like the Cruze and Malibu. The Corvette will always be a niche product.
However, it's a very profitable niche. The starting price for the 2014 Corvette Stingray is over $50,000 , and the price can easily sail above $70,000 for the more capable and higher-option versions. GM North America President Mark Reuss has stated that the Corvette "makes as much money as any of the top-profit models in our company."
That suggests that GM could be earning $10,000 or more in gross profit (before counting development costs) for every Corvette it sells. When the company was selling just 10,000-15,000 a year, this still did not add up to much in the grand scheme of things.
However, based on last month's sales pace for the 2014 Corvette Stingray, GM will sell 10,000-15,000 this quarter. Even if demand tapers off over time, GM will still probably sell at least 30,000 Corvettes in the next year. Due to the product's hefty profit margin, this significant sales bump could move the needle for GM's companywide profitability, which has lagged that of Ford Motor (NYSE: F ) .
Driving foot traffic:
While Corvette enthusiasts are sure to be pleased about the arrival of the 2014 Corvette Stingray, the car has a secondary purpose for GM. As noted above, it serves as a "halo car" for the Chevrolet brand.
As Chevy dealers start to build up inventory of the new Corvette, having a flashy new sports car in the showroom or on the lot will hopefully attract more visitors to the dealerships. Most of the extra visitors may not be particularly interested in buying any Chevy vehicle. However, having the additional traffic gives sales reps plenty of motivation to chat up potential customers and try to sell more cars and trucks. In this regard it helps that Chevy has an increasingly competitive portfolio of affordable cars.
"Foolish" bottom line:
The new 2014 Corvette Stingray is off to a fast start in the U.S. At October's pace, GM will sell more Corvettes in the last three months of the year than it did in the first three quarters! The jump in Corvette sales could provide a noticeable bump to GM's bottom line, because they are among the most profitable cars it makes.
Furthermore, as new Corvettes arrive on dealer lots, they should pull more people onto the showroom floor, giving dealers an opportunity to boost sales of other GM models. This -- along with the recent launch of GM's new full-size pickup trucks -- should make for a strong Q4 at Chevy dealers across the U.S.