Sales of pickup trucks are sliding as gasoline prices remain high.
Roland Jones - MSNBC - August 1, 2006
F-Series pickup truck sales dropped 45.6 percent last month.
Pickup truck drivers are supposed to be rugged, outdoor types, so it’s startling to Gary Drenik, president and CEO of BIGresearch, when a large number of them say they’re thinking of trading in their muscular rides for leaner sedans, or eco-friendly hybrids.
“How much more radical can you get that a pickup truck driver wanting to switch to driving something like a Toyota Prius?” asked Drenik, whose July Consumer Intentions and Actions Survey (CIA) found that over 50 percent of truck drivers who plan to buy a new vehicle in the next six months will consider buying a regular car, or a hybrid vehicle.
“That’s quite a change in buying habits,” Drenik said. “It’s clear, especially among truck owners, that people are willing to drive less, spend less and consider every option to equalize the impact of rising gas prices - including buying a smaller car.”
Surging gas prices have already decimated sales of gas-guzzling sports utility vehicles, or SUVs, but now the nation’s Big Three automakers are facing another economic challenge - a slump in sales of the pickup truck, a quintessentially American vehicle and a highly-profitable one for U.S. automakers.
On Tuesday, Ford said its July vehicle sales plunged 35.2 percent from a year earlier, when heavy discounts fueled a near record month for the auto industry. The decline was due in part to a big slide in sales of F-Series pickup trucks, long the country’s best-selling vehicle and the company’s bread-and-butter vehicle, which dropped 45.6 percent. Sales of Ford, Lincoln and Mercury trucks plummeted 44.8 percent.
The July sales numbers were similarly gloomy at rival General Motors, which saw its truck sales slump 31.2 percent from the same period a year ago, while overall sales for the month fell 22.2 percent. And overall sales for DaimlerChrysler’s Chrysler division were down 37 percent in July. The three automakers saw sales slide sharply in July because of a lack of employee discount incentives that drove up sales in the same month a year ago.
The main culprit for the decline in truck sales is gas prices points out BIGresearch’s Drenik. His July CIA report, which polls some 10,000 consumers on such matters as their view of the economy and shopping plans, found that 35 percent of truck owners have deferred major purchases to fill up their gas tanks, while 55 percent have reduced dining out and 58 percent have cut back on vacation and travel.
The CIA survey also revealed that over 60 percent of truck owners are making fewer shopping trips, or they are shopping closer to home, using coupons more often and doing more comparative shopping both online and with newspaper ads and circulars.
“Americans like their trucks and they are willing to defer purchases to put gas in their tanks. But as prices rise they are rethinking that relationship,” Drenik said.
“The price of gas is up something like 30 percent over the last year, so if you bought your truck one year ago the problem of paying for gas has become more acute, and you couldn’t have planned for the price increase, so people are trying to save money by taking fewer trips, or taking other measures,” Drenik said. “They are doing a lot of things to make do, but of course there comes a point when you say, ‘Maybe I should get rid of the truck.’”
Pickup sales are slumping as “recreational” users - drivers who like the look and feel of the vehicles, but don’t necessarily need them for their work - are bailing out of the segment in the face of higher gasoline prices, shifting instead to smaller, more fuel-efficient vehicles notes Tom Appel, editor of Consumer Guide Automotive, a service for automotive buying advice.
“Ford thinks the people who like big trucks have dropped out of the market, so now it’s down to those that need them for their work,” Appel said. “And there’s a secondary influence here: If gas prices remain high, truck buyers are likely to stay with the vehicles they have and won’t buy new ones, to make up for the higher cost of gas.”
The gloomy July sales data come as Ford plans to accelerate its restructuring program, announced in January, to close 14 plants, including seven assembly plants, and cut 30,000 jobs.
Ford typically sells about 900,000 full-size pickup trucks each year and earns a large chunk of its profit from these sales. The worry now is consumers will turn to less profitable, smaller cars, or to foreign brands, like Toyota and Honda, which have made significant in-roads into the U.S. automotive market. Both companies reported strong July sales Tuesday, with Honda saying it is unable to keep up with demand for its small cars.
So far, Ford’s pickup sales have remained relatively steady as the company has propped them up with enticing incentives and rebates. But they have slipped in recent months, leading to the speeding up of the firm’s turnaround plan. Year-to-date, U.S. sales of pickups are down 10.8 percent according to Autodata, which tracks industry data.
Ford typically sells about 900,000 full-size pickup trucks each year and earns a large chunk of its profit from these sales. The worry now is consumers will turn to less profitable, smaller cars, or to foreign brands, like Toyota and Honda, which have made significant in-roads into the U.S. automotive market. Both companies reported strong July sales Tuesday, with Honda saying it is unable to keep up with demand for its small cars.
So far, Ford’s pickup sales have remained relatively steady as the company has propped them up with enticing incentives and rebates. But they have slipped in recent months, leading to the speeding up of the firm’s turnaround plan. Year-to-date, U.S. sales of pickups are down 10.8 percent according to Autodata, which tracks industry data.
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