http://www.msnbc.msn.com/id/17467382/from/RS.3/

By Roland Jones
Business editor
MSNBC
Updated: 4:21 p.m. ET March 6, 2007




General Motors stunned the automotive world last week, but it wasn't
for the usual negative reasons.

Industry followers more accustomed to hearing about large layoffs or
sickening sales declines were startled when GM said its U.S. sales
rose 3.7 percent in February, even as its two domestic rivals, Ford
and Chrysler, posted sizable declines and the overall market was flat.

GM's gain in the normally soft month was led by strong demand for its
sport utility vehicles and pickup trucks including the redesigned
Chevrolet Silverado. Even more impressive, the gain came without the
huge sales incentives of previous years.


GM reined in its incentive program in January, and so the February
sales gain "speaks to the strength of their new pickups," said Global
Insight Research Analyst Aaron Bragman.

"We thought GM would be in the same boat as the other Big Three U.S.
automakers and continue to feel the slump that they are all
experiencing, but it seems GM's turnaround may be starting to gain
traction with consumers," Bragman said. "We're seeing a lot of loyal
GM customers trading in their old pickups for new versions."

Sales of GM's full-size trucks jumped 29 percent in February thanks
largely to the redesigned Silverado and the GMC Sierra. By contrast,
sales of Ford's F-series line of full-size pickup trucks dropped 12
percent in February, with the F-150 conceding its title as the best-
selling vehicle in the United States to the Silverado for the month.

February's surprising gain suggests the world's largest automaker -
which is in the midst of a turnaround plan that includes massive job
reductions, plant closures and a revamping of its product lineup -
might have started to turn a corner.

Good products are key to success for America's big automakers, which
are struggling with fierce competition from Asian automakers like
Toyota and Honda. For years, U.S. automakers have focused on
profitable SUVs, but their popularity has waned as consumers have
turned to more fuel-efficient sedans - a market segment dominated by
the big Asian automakers.

GM has a promising array of new cars coming to market, including the
Saturn Aura sedan and the redesigned Chevy Malibu, which goes on sale
later this year. Sales of GM's midsize sedans rose 25 percent in
February, and its subcompact Chevrolet Aveo saw sales grow 17 percent.

But trucks are still the most important segment for GM profits,
Bragman said. The margins on trucks are far greater than those seen on
passenger cars, he said, adding that the success of the Silverado, the
Sierra and the big GMT900 SUVs - including the Tahoe, Yukon and
Suburban - is "absolutely vital" to GM's turnaround.

GM and Ford have dominated the big-truck market for decades but are
feeling the heat from a new entrant - Toyota. The Japanese automaker
has invested billions of dollars to relaunch its full-size Tundra
pickup truck with an eye to the heartland market that has long escaped
it.

"One thing that has been very consistent about Americans - they love
big vehicles," Bragman said. "It's not necessarily the high price of
gas that deters them from buying big SUVs and trucks - it's the
volatility in the price of gas that we saw last year. So if gas prices
are stabilizing where they are now, Americans can plan for that and
buy the vehicle they are compatible with."

GM has made a concerted effort to revamp its big pickups, Bragman
said. The quality of the interior of GM's new Chevy Silverado is a
'quantum leap' over the outgoing model, he said, including high-
quality materials that give an air of luxury and a low instrument
panel, which means good visibility for the driver.


"GM knew the quality of the Tundra would be above reproach, so when
they made the new Silverado they knew they had to be not as good but
better than the Tundra," he said. "So they set the benchmark high and
I think they met it."

He noted that the Silverado was voted North American Truck of the Year
for 2007 at this year's Detroit auto show and has been well-received.

Still, the Tundra also is winning praise. Introduced in mid-February,
the Tundra sold almost 10,000 units last month. Toyota has said it
expects sales of its Tundra to eventually top the 200,000 mark
annually, but Bragman is skeptical that it will reach that level any
time soon.

By contrast the market-leading F-150 sold nearly 800,000 units last
year, and GM sold more than 600,000 Silverados.