Take a guess on how much money General Motors makes every time it sells a Tahoe. I’m not going to tell you yet, but I will say that knowing might change how you negotiate for the biggest of the big SUVs.
You probably won’t score much of a discount, though, because it’s those profits that help keep GM afloat and allow it to field entries in other, less profitable, markets.
The Suburban, Yukon, Escalade, and Tahoe make up about half of the full-size SUV market in the United States. There is some competition in the market, and prices can be incredibly high, which makes me wonder: Are GM’s SUVs selling because they’re great or because the competition is too expensive?
Big families need the utility offered by full-size SUVs. They aren’t the big sellers they used to be, but their popularity is gaining due to lower gas prices. Families who could make due with a smaller SUV are splurging and buying large—a clear sign that buyers in this market prefer capability to fuel economy.
There are plenty of other great full-size options available, including the Infiniti QX80, Nissan Armada, Ford Expedition, Toyota Sequoia, and Lexus LX. However, none of those has been around as long as the General Motors offerings. Plus, those luxury SUVs can cost $20,000 more than a GM option. The competition is strong, but frankly the big rigs from America are hard to beat.
One article summed it up like this:
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.
Even at $50,000 or more, there’s value in the GM products for customers and plenty of profit for the automaker.
GM’s success in the market is certainly not due to a lack of competition. It’s because the vehicles wrap reliability, capability, luxury, comfort, and value into an incredibly alluring package.
General Motors may struggle with finding success in the family sedan market, but its success with the big SUVs continues to pull the weight and produce the profits.
Which full-size SUV would you buy?