Big pickup sales rise 3% despite overall plunge in sales

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Thread: Big pickup sales rise 3% despite overall plunge in sales

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    Big pickup sales rise 3% despite overall plunge in sales



    Big pickups helped pull the Detroit 3 through the early weeks of a crisis that has shuttered plants and kept many would-be buyers at home.

    In a quarter when total U.S. new-vehicle sales fell double digits, deliveries of full-size pickups rose 3 percent. General Motors posted its best first-quarter full-size pickup sales in 13 years after rolling out no-interest financing on seven-year loans, and Ram was among just three brands in the entire industry to report an increase last week.

    As sales dried up at dealerships around much of the country starting in mid-March, there was far less disruption in states such as Texas, Florida and Georgia, where governors were slower to put restrictions on residents and businesses. March pickup sales were exactly in line with J.D. Power’s pre-coronavirus forecast in the Southeast and off just 1 percent in the South Central region. Meanwhile, sales in the Northeast plummeted 29 percent below expectations.

    “As some states put strict social distancing orders in place, others were business as usual, and for us, that meant truck sales continued,” a GM spokeswoman said.

    The coming months could prove more challenging for all vehicle segments, including pickups, as more states restrict commercial activity and tell residents to cancel all nonessential travel. Markets where stay-at-home restrictions are in place “typically show an 80 percent reduction in sales from the baseline forecast shortly after orders are enacted,” J.D. Power said.

    Even before Texas Gov. Greg Abbott issued a stay-at-home order last week, Dallas and other parts of the state already had restrictions. Yet Dallas was one of the more resilient new-vehicle markets last month.

    “It’s doing so based on pickup truck sales, which are being held up with very hefty incentives,” said Tyson Jominy, vice president of data and analytics at J.D. Power. “This is keeping more consumers in-market than we see in another location. So even though Dallas has had an order in place, it has held up fairly well.”

    Pickup buyers took out bigger, longer-term loans in March and rolled in more negative equity from their previous vehicles.
    An 84-month loan is “becoming a very mainstream offer very quickly,” Jominy said, going from 8 percent of sales during the second week of March to 23 percent in the fourth week. J.D. Power said 46 percent of light-duty pickup sales during the week ending March 29 were financed with 84-month loans, compared with 10 to 15 percent normally.

    Fiat Chrysler Automobiles launched a new advertising campaign last week called “Drive Forward,” promoting 0-for-84-month loans, no payments for 90 days and “the ability to shop and buy from the safety of your home.”

    “There are unprecedented deals available on pickups, at least the majority of pickups, at this time,” said Thomas King, president of J.D. Power’s data and analytics division. “Pickups are expensive vehicles. … That means that the savings you get from having a reduced interest rate are very, very powerful.”

    In contrast, demand for midsize pickups plunged. The Chevrolet Colorado and GMC Canyon each saw sales fall 36 percent in the first quarter. The Toyota Tacoma declined 7.8 percent in the quarter, including a 30 percent drop in March.
    “A lot of midsize trucks are either [for] small businesses or lifestyle buys, and we’re seeing right now that small businesses are really suffering in some areas,” Akshay Anand, executive analyst at Kelley Blue Book, told Automotive News.

    Cox Automotive said March incentive offers were more chaotic than usual. New discounts normally appear in the first few days of a month and continue through the end of it, but about two-thirds of auto brands debuted offers in the middle of March as fallout from the coronavirus pandemic spread rapidly.

    Brad Korner, general manager of Cox Automotive rates and incentives, said many March offers appear to be sticking around at least through early this month because automakers were still evaluating how consumers responded to them.
    Among automakers that still report monthly, March sales fell 31 percent at Hyundai-Kia, 37 percent at Toyota Motor North America, 47 percent at Subaru and 48 percent at American Honda. Those numbers provide a glimpse of what the industry will face in April, May and potentially beyond that.

    The second quarter will be the “real measure of COVID-19’s impact on the economy and the auto industry,” Charlie Chesbrough, Cox Automotive’s senior economist, said in a statement.

    April is likely to produce further “historic declines” because of “lack of consumer confidence and substantial increases in unemployment,” Chesbrough said, and the trend could continue into “early summer, at best.”

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Irrelevant; how much are they going to be down in Q2?
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    It's going to be brutal, many dealers are only open for service not sales

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Quote Originally Posted by jzchev28 View Post
    It's going to be brutal, many dealers are only open for service not sales
    I just got an e-mail today from the GMC Dealer I bought my truck at, they just closed service too!
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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Quote Originally Posted by Ed753 View Post
    I just got an e-mail today from the GMC Dealer I bought my truck at, they just closed service too!
    in Canada service for ANY vehicle land / air / sea is considered essential service so they are NOT FORCED to shut

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    I won’t buy one till they gut the interiors and offer the 10 speed tranny standard with the 5.3. Also, put back all the decontented items removed from previous trucks.

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Quote Originally Posted by richmond2000 View Post
    in Canada service for ANY vehicle land / air / sea is considered essential service so they are NOT FORCED to shut
    They are here too, but if you've got zero business; why stay open?

    I've driven 220 miles in the last 3 weeks, how much maintenance do you need, or wear and tear do you incur driving 3,500 miles a year?
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    Quote Originally Posted by richmond2000 View Post
    in Canada service for ANY vehicle land / air / sea is considered essential service so they are NOT FORCED to shut
    Here in NY auto repair is Essential, as is:

    ‘automotive sales conducted remotely or electronically, with in-person vehicle return and delivery by appointment only’

    https://esd.ny.gov/guidance-executive-order-2026

    I’m not sure about other states.
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    Re: Big pickup sales rise 3% despite overall plunge in sales

    .

    This is truck sales for March; "Actual vs Forecast" We can clearly see sales tailed-off across the country at different times, basically aligning with the wave and severity of Covid-19 outbreak.


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    Re: Big pickup sales rise 3% despite overall plunge in sales

    "Pickup buyers took out bigger, longer-term loans in March and rolled in more negative equity from their previous vehicles.
    An 84-month loan is “becoming a very mainstream offer very quickly,” Jominy said, going from 8 percent of sales during the second week of March to 23 percent in the fourth week. J.D. Power said 46 percent of light-duty pickup sales during the week ending March 29 were financed with 84-month loans, compared with 10 to 15 percent normally."

    Are we really going down this road again? Self inflicted wounds even worse than leasing.

    Not surprised at the SE. We came back from SW Florida on March 22 and 23 and the highways were busy, stuff was open. Spent the night north of Macon and literally nothing was closed. Somewhat different in St Louis when we got home.

    The little trucks I can understand. That's really a limited market and once everyone who wants one has one the surge is over. Kind of like coupes and two seaters.

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Quote Originally Posted by Larkbill View Post
    "Pickup buyers took out bigger, longer-term loans in March and rolled in more negative equity from their previous vehicles.
    An 84-month loan is “becoming a very mainstream offer very quickly,” Jominy said, going from 8 percent of sales during the second week of March to 23 percent in the fourth week. J.D. Power said 46 percent of light-duty pickup sales during the week ending March 29 were financed with 84-month loans, compared with 10 to 15 percent normally."

    Are we really going down this road again? Self inflicted wounds even worse than leasing.

    Not surprised at the SE. We came back from SW Florida on March 22 and 23 and the highways were busy, stuff was open. Spent the night north of Macon and literally nothing was closed. Somewhat different in St Louis when we got home.

    The little trucks I can understand. That's really a limited market and once everyone who wants one has one the surge is over. Kind of like coupes and two seaters.
    0% interest rates, and long-term loans in itself isn't "bad"

    What is bad is that the buyer is tricked into thinking he got an "interest free" loan, but we all know when you choose that option, you forgo thousands of dollars in rebates.

    Essentially you are paying ALL of the interest up front, and then some, but are tricked because of the "0%" and lower payment.


    Example:

    Buyer A
    $45,000 Purchase Price
    1.99% Interest Rate (current rate at my CU)
    60 Month Term
    $788.55 Payment
    $2,313 Total Interest Paid

    $18,538 Loan Balance at 36 months

    The total interest is only $2,313 yet in most almost all cases, taking the 0% option will negate far more than $2,313; lets say you lose $3,000 in rebates.

    Buyer B
    $48,000 Purchase Price
    0.00% Interest Rate
    84 Month Term
    $571.43 Payment
    $0 Total Interest Paid (but you paid a $3,000 premium for the same truck to get the 0%)

    $27,428 Loan Balance at 36 months


    Additionally your "negative equity" will be both greater and for a longer period of time; see "Loan Balance at 36 months"

    At 3 years, Buyer A likely has some equity, but even if he doesn't, he is $8,890 closer to being "above water" than buyer B.

    In my example, I used $3,000 as the lost rebate amount, my personal experiences, the lost rebates are always more than that.
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    Re: Big pickup sales rise 3% despite overall plunge in sales

    How cruel of you to confuse people with actual numbers!

    They just want to look cool and there you go raining on their parade.

    I had to move from the front to the back in the car biz because I just couldn't do it. Then it all melted down and I GOT to move on. Now here we are doubling down. All that negative equity will eventually come back around. Just like Alice's Restaurant.

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    Quote Originally Posted by Larkbill View Post
    How cruel of you to confuse people with actual numbers!

    They just want to look cool and there you go raining on their parade.

    I had to move from the front to the back in the car biz because I just couldn't do it. Then it all melted down and I GOT to move on. Now here we are doubling down. All that negative equity will eventually come back around. Just like Alice's Restaurant.
    I know, I know, many people "Whats my payment"?

    When I was at the Dealer, many years now, the sales guys would share stories of the "Twenty-Thousand Dollar Festiva"
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    Re: Big pickup sales rise 3% despite overall plunge in sales

    GM's HD Truck sales are primarily due to the fact that GM finally made a "HD Truck" that is capable of towing the loads that until 2020 were only available on Ford's Super Duty or RAM HD trucks. After the initial "sales bump" of the many GM truck fans who couldn't buy a HD GM Truck if they required something that could tow above 25,000 lbs the sales will "level off" in a year or two, GM cannot "Rest on their Success" since neither Ford or RAM are going to allow their trucks to stagnate in their current configurations and will surely make updates for 2021. Ram is already rumored to update the Transmissions with more gears as well as offering a larger 7.0L Gas engine. Ford always seems to have a "trick" to add to the Super Duty and will make the most of the new 7.3L's power advantage in the segment as well as making updates to the new Tremor trim.

    GM must add the 10 speed as an option for the 6.6L Gas engine as well as offering the 4.10 gears with it for both 6 and 10 speed models, another update would be adding 3.55 Gears for the Duramax that are quite effective on the Super Duty. Adding the 10 Speed to the 6.6 Gas allows GM to offer it with the 3.42 gears currently used for the Duramax for better performance and MPG. Would suggest GM consider offering a "HD Tow" package on both 1500 and HD lines that use 4.30 gears with the Duramax along with 22.5" Wheels/Tires used on 18 Wheelers for the HD trucks and 4.10 Gears with the 6.2L Gas in the 1500 with a tow rating of 14,000 lbs and GVWR over 8,500 lbs.

    On the 1500 it is time to drop the 6-speed and go with the 8-speed on the 4.3L V6 and 5.3L AFM trucks that will allow use of the 3.23 gears for better MPG and performance and make the 5.3L Custom/LT Max tow pkg with the 3.73 gears. The 8-speed allow the 3.23 gears deliver superior perfomance to the 6-speed with 3.42 gears with better MPG and reduces production costs. Other gear ratios that GM should add to the 1500 are 3.55 and 3.90 that would bring the Transmission/Axle Ratio offerings similar to the F-150. GM does not need to go the 4.10's in the 1500 since the 5.3 and 6.2 don't need that low of a gear since they don't need to rev that high to be effective and the 3.90's will perform similar to 3.55 gears with 35 inch tires and the 3.90's should get better MPG's. The 3.55' give better performance without much of a MPG penalty.

    Other improvements are needed in the Custom Trim line that desperately needs better seats and other features added to the option list.

    1500
    4.3L 8-Speed 3.23 3.42 3.73
    5.3L 8-Speed 3.23 3.42 3.55 3.73 3.90
    2.7T 8-Speed 3.42
    5.3L 10-Speed 3.23 3.42 3.55 3.90
    3.0T 10-Speed 3.23 3.42 3.55 3.73 3.90
    6.2L 10-Speed 3.23 3.42 3.55 3.90

    HD
    6.6L Gas 6-speed 3.73 4.10
    6.6L Gas 10-Speed 3.42 3.55 3.73 4.10 4.30
    6.6L TD 10-Speed 3.42 3.55 4.10 4.30
    Last edited by SierraGS; 04-19-2020 at 08:31 PM.

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    Re: Big pickup sales rise 3% despite overall plunge in sales

    The Dodge Ram has made inroads, that were never imagined from a Chrysler product. Didn't they climb to number 2 in sales, behind the F-150?

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