[doh]

http://www.businessweek.com/lifestyle/content/apr2008/bw2008048_209057.htm?campaign_id=yhoo

By any measure, March was a lousy month for the car business. But for Detroit, it was truly dreadful.

Pickup trucks are taking a real beating. The combination of high fuel prices and the housing market is hammering sales of Detroit's best-selling vehicle—the large pickup. The downturn comes just as all three Detroit carmakers are coming out of big restructuring actions, and two of them—Ford Motor ( F) and Chrysler—are bringing new pickups to market.

While the pickup business has been struggling for some time, March was especially tough considering that there were some big sales on pickups. Sales of Ford's F-series and the Chevrolet Silverado were down about 18%, and the Dodge Ram was off 26%. Mark LaNeve, GM-North America's vice-president for sales and marketing, was understated when he said: "March was a soft month for traditional trucks."

Drop-off in Pickups
It wasn't that automakers weren't making it easy to buy a truck. The discounts were generous. General Motors ( GM) had 0% financing. Ford offered rebates as high as $5,500. Dodge also offered $5,000 off on the Ram according to Automotive News. Toyota Motor (TM) was also singing the blues with its Tundra pickup, offering 0% or up to $5,000 off. Says J.D. Power & Associates analyst Tom Libby: "They spent a lot of money on incentive, and they still couldn't hold sales up."

What's worse is that prices for used pickup trucks fell for the sixth straight month, notes Lehman Brothers (LEH) analyst Brian Johnson. In March, used pickup prices fell faster than for most other types of vehicles.

Used pickups are losing their value quickly. The average three-year-old truck lost $4,200 over the past year, says Ricky Beggs, vice-president and managing editor of the Atlanta-based Black Book, which tracks used-car prices. Two years ago, a three-year-old pickup only lost $2,650 in value, he says. Even diesel pickups—valued by businesses because of their better fuel economy—have been losing value. "They have been going in the can," Beggs says. "There's no question it's related to the contraction in housing."

Declining Source of Strength
With construction down, contractors aren't buying many new trucks. And for the recreational pickup buyer, gas prices have become a problem. Even some dealers in Texas, where pickups are king, were complaining. "We were down quite a bit," says James Har****, part owner of Moritz Chevrolet in Fort Worth.

 

[PhishPhood]

The NA buying public is speaking forcefully with it's wallet. The vehicle makers know this very very well from their own monthly sales stats. It's easy to track.

Midsized BOF SUVs like the iconic Explorer, Durango/Aspen, TrailBlazer/Envoy, 4Runner/FJ and Pathfinder are finished ... DOA. At best a couple will remain as niche vehicles for the hardcore offroader. The others will be retired or remade as crossovers.

Fullsized BOF SUVs are on life support. The Escalades, Tahoe/Yukon, Expedition, Armada and soon the Sequoia are no longer symbols of 'having made it'. They too will become niche vehicles as family movers that can tow. But the new class of crossovers like the Lambda's are better as just people movers. When the 2-Modes are dropped into the Lambdas it will really goose sales.

Certain people will always need a truck. But they will need it for work, not as a statement of ruggedness. If, because fuel is too expensive, one is not going to drive 1000 miles out into the wilderness to get food for the family then why own a truck to go around the block to the supermarket? In their heyday roughly 2.5 million full sized trucks were sold annually and about half that many 'compact trucks' were sold. This year the numbers may look like..
.. 1,800,000 full sized trucks
..... 400,000 compact trucks

Overall from the end of 2003 to the end of 2007 1 million buyers have chosen not to buy a truck or truck-based SUV. Just this last quarter an additional 160,000 buyers opted not to buy as compared with last year's figures. Some can't buy for a number of reasons ( housing, economy, personal finances ), some are just waiting and some will never buy a truck/SUV again.

 

[mgescuro]

Why are people surprised? We knew this was going to happen 2-3 years ago!!!
At least GM launched their new trucks a few years ago, so they can now concentrate on new CARS.

I don't believe trucks will go away. But trucks as we know it -- large, hulking behemoths will probably go away from normal use and be reserved for more commercials uses. If you want a truck these days, it's most likely going to be a compact to mid-size one. Unfortunately, GM and Ford gave up that market to the imports YEARS ago.

This shouldn't be a surprise to anyone.

 

[Generous Motors]

Phish, Yes sales are down in all segments not just trucks, so that 1 million who didn't buy a truck also just flat didn't buy any new vehicle. I doubt trucks will ever come back to the heights they once occupied in sales volume, but like said nothing will get some of the jobs done like a full size truck. I personally believe that it is just the economy and that the soft full size truck owners can't justify owning a 5000 lbs V8 car with an open trunk.

 

[xPUMPx]

i still want one

 

[Greg Burr]

Investment in the new crossovers couldn't have come any sooner.

 

[silvergoat2k6]

Well, just do the math...a 30-gallon tank would cost anywhere from $120-$150 to fill up with gas at $4-$5/gal (don't laugh, we'll be there sooner than you think)...and at 10-14 real-world mpg, it costs some serious money if you're putting any kind of mileage on them. Plus, last I checked they weren't exactly cheap to buy and/or insure.

It's kind of a mixed bag...on one hand, I'm glad to see people getting out of big gas-guzzling trucks and suv's that they really don't need...on the other hand, we all know that GM, Ford, and Chrysler rely on these full-size trucks and suv's for the majority of their profits, and I just don't see how GM, Ford, or Chrysler will ever make any money in America if they can't continue to sell the large number of full-size trucks and suv's they're used to selling every year.

 

[01sunfire01]

i have seen also of people who own a big truck are going out and buying little cars that are good on gas and keeping the truck parked when not needed. my dad is now looking for a truck and hes going to drive my cavalier around when im driveing my G5 and in the winter he will take the truck and ill take my cavalier back.

 

[stevecmh]

i do not think that it is America does not love them anymore i just think that people who do not really need trucks are getting something else or smaller. .. THe pick up is going no where.. i will always be a symbol of America

 

[tgagneguam]

And for the recreational pickup buyer, gas prices have become a problem. Even some dealers in Texas, where pickups are king, were complaining. "We were down quite a bit," says James Har****, part owner of Moritz Chevrolet in Fort Worth.

Wait a minute. Buyers are voting their wallet and exercising their influence? They're the ones telling automakers that they need to come up with more fuel efficient vehicles? This sounds awfully like a free market solving some problems, if you ask me. I think the government needs to get involved and put an end to this silliness. Is there some legislation that can stop this?

The downturn comes just as all three Detroit carmakers are coming out of big restructuring actions, and two of them—Ford Motor ( F) and Chrysler—are bringing new pickups to market.

Sure, buyers aren't buying them in the numbers they were even just recently, but the vehicles are still going to be needed, and Detroit needs to invest in them. The timing might not be ideal, but if the market is shrinking, let Asian brands take more of the hit. I say come out swinging. After all, the F-series and Ram account for hundreds of thousands of sales each for their respective parents.

 

[VCDJ]

Like i said who is crazy to buy a truck when price of gas is almost $4 and it will go up every year. Businesses will always need a truck. But why do people buy then that just go to an office job is just crazy. Why would you want to waste so much money on fuel and truck. There are better ways to spend it.

 

[tkrelston]

I think the fact that trucks are generally $ 10 grand over priced has a big part of why they aren’t selling as well. Many truck buyers simply can’t afford a $50,000 dollar Duramax, especially when considering current financial woes and prices!

 

[tgagneguam]

i have seen also of people who own a big truck are going out and buying little cars that are good on gas and keeping the truck parked when not needed. my dad is now looking for a truck and hes going to drive my cavalier around when im driveing my G5 and in the winter he will take the truck and ill take my cavalier back.

Does the cost of insurance and taxes on two cars plus the cost for gas for a more fuel efficient car still come to less than what it would cost to simply pay the taxes and insurance on one vehicle that gets lesser fuel economy? I don't know, but it sounds like it might be too close to call, depending on how much your father drives.

It strikes me as odd that someone would spend thousands on another car to save money on gas, particularly when you now have another tax bill and insurance bill.

Sort of reminds me of someone who bragged about her husband paying 6 cents less per gallon for gasoline that required a 30-minute round trip to obtain. I summed it up simply: "So, your husband spent 30 minutes roundtrip to save approximately 90 cents to fill up your car?! He mustn't make much per hour to see that as a good use of half an hour of his life."

 

[stevews602]

Detroit made a ton of money selling overpriced SUV’s and trucks to yokels who thought it was cool to drive the latest fad.
Now with skyrocketing gas prices and a renewed “green” movement they will all buy the new fad, overpriced hybrids.
At least for those out there who actually need a truck, they’ll get a great deal on a new or used one.
Maybe Detroit will put their energy on making a reasonably priced truck for those who need them and not into $50k pretty boy ones.

 

[nascarnate326]

If GM made a competive mini truck, I think it would do very well. I miss the S10, we had many of them and they were great trucks.

 

[motorman]

most all the used trucks at the dealership did not have a scatch in the beds because they never hauled anything. my silverado is 20 years old this year and i am waiting for someone to trade on a nice ext cab 8' bed so i can replace it. i just use my truck to haul our quads to our place in the mountains so it sets most of the time. the $$$ i save buying a used one will buy lots of gasoline

 

[ponyok67]

Trucks aren’t going anywhere. The market will fluctuate and shift around. Power trains will change, design and content will be market driven, customer base may change, but trucks and specifically the pickup will be forever. The evolution is already in motion, maybe not full bloom, but trucks will survive.

 

[PhishPhood]

Does the cost of insurance and taxes on two cars plus the cost for gas for a more fuel efficient car still come to less than what it would cost to simply pay the taxes and insurance on one vehicle that gets lesser fuel economy? I don't know, but it sounds like it might be too close to call, depending on how much your father drives.

It strikes me as odd that someone would spend thousands on another car to save money on gas, particularly when you now have another tax bill and insurance bill.

Sort of reminds me of someone who bragged about her husband paying 6 cents less per gallon for gasoline that required a 30-minute round trip to obtain. I summed it up simply: "So, your husband spent 30 minutes roundtrip to save approximately 90 cents to fill up your car?! He mustn't make much per hour to see that as a good use of half an hour of his life."

Obviously it doesn't make sense from a purely financial comparo aspect but there is also the very basic concept that people are free to spend their money as they wish whether it's on trips to Vegas, investments in penny stocks, a massive CD collection, etc etc.

Yes to minimize total transportation costs it makes sense to trade in the pickup and buy a used compact. But that may have repercussions on other aspects of family life and personal enjoyment. Keeping the pickup or SUV when it comes time to replace it and getting a more efficient daily driver seems like a smart move to me. Then one has a lot of options available.

 

[61BelAir]

I still love trucks and last time I looked I was an American. I do plan on getting myself another full size truck, but not until I have myself a economy car to go along with it for daily use.

 

[PhishPhood]

Trucks aren’t going anywhere. The market will fluctuate and shift around. Power trains will change, design and content will be market driven, customer base may change, but trucks and specifically the pickup will be forever. The evolution is already in motion, maybe not full bloom, but trucks will survive.

There is no question that they will suvive it's just that they won't be as widespread as in the 90s. When I grew up in the 50's and 60s there were few if any around. Most were used on farms and by workers in the building trades. We are probably going back to this balance.

Instead of 2.5 million full sized trucks1.2 to 1.5 million sounds about right to me. $55000 crewcabs with movie theaters inside as a daily driver?

I'm surprised that the small truck segment is doing so poorly. I'd think that people getting out of big trucks would move to smaller ones. But it appears that the buyers are just skipping over this segment entirely and going directly to cars.

Businesses and the buyers who really need trucks are generally keeping the full-sized ones and 're-upping' when it makes sense. Wannabee and appearance buyers apparently are just unloading them for good. $55000 for a crewcab with a movie theater inside as a daily driver?