Range Rover, Range Rover Sport, Chevrolet Silverado, GMC Sierra Demand So Strong That General Motorsa (GM) And Jaguar Land Rover Are Struggling With Supply

on October 01 2013 6:22 AM
2014 Range Rover Sport
Jaguar Land Rover Ltd. unveiled the 2014 Range Rover Sport at the 2013 New York Auto Show. IBTimes/Charles Poladian

In the U.S., so many consumers are lining up to buy GM’s GMC Sierra and Chevrolet Silverado pickup trucks that General Motors (NYSE:GM) can’t produce enough of the most popular motor for those models. Meanwhile, in China, demand for the Range Rover and Range Rover Sport SUVs has the Britain-based, Indian-owned automaker facing a capacity constraint because its English factory is already working 24-7.

These are good problems to have, but problems nonetheless.

Some buyers in China, the world’s largest and fastest-growing auto market, are reportedly paying over $80,000 to put themselves in the front of a waiting lists for the Range Rover and Range Rover Sport, which already carries a hefty price tag exceeding $457,000, according to Automotive News Europe.

The waiting period for the SUVs, manufactured in Solihull, England, is up to nine months. Part of the problem is that Ford Motor Co. (NYSE:F), which owned Jaguar Land Rover until it sold the company to India’s Tata Group for $2.3 billion, still supplies engines for the British-based carmaker.

In the U.S., the world’s second-largest auto market with a heavy appetite for full-sized pickup trucks, GM can’t produce enough of its 5.3 liter V-8 engines, the most popular type for its Sierras and Silverados, due to constraints for certain drive-train components from an undisclosed supplier, according to Bloomberg. One anonymous tipster said the problem could persist for more than two months.

GM’s popular high-margin pickups yield $8,000 to $10,000 in profit, so being forced to turn away dealers is a painful proposition. Ford will come out with a new F-150 in the fall of 2014. The F-Series pickup is the country’s top-selling vehicle, so GM has until the new F-150 comes out to lure customers to its pickups, which were redesigned this year for the first time since 2006.

The U.S. auto industry is in a solid rebound from its crash in 2009 amid the sub-prime mortgage crisis and economic recession. The seasonally adjusted annualized sales rate touched 16.1 million units in August, the highest pace of growth since October 2007.

Automakers will announce September sales results on Tuesday. Sales are seen declining last month due largely to the timing of the three-day Labor Day sales weekend. Annual sales are still in line to meet expectations of 15 million to 15.5 million. Last year sales touched 14.5 million, a five-year-high.  

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