Caution: Lower Truck Sales Ahead
DETROIT, June 8 — For most of their history, pickups have been to auto
companies what they were to their customers: reliable workhorses, with
Detroit counting on them for big sales and profits even as flashier cars
came and went.
When paired with sport utility vehicles, pickups provided auto makers
with a one-two punch of profits and a measure of insulation from foreign
competitors, which have struggled to make headway in a market dominated
by General Motors, the Ford Motor Company and the Chrysler Group.
By the late 1990s, pickups became more than just work trucks. Loaded
with the same expensive features found on cars, like leather seats,
booming stereos and big passenger compartments, pickups shared the same
cachet as S.U.V.’s, bought by consumers who parked them in suburban
driveways, not at construction sites.
But as with sport utilities, the popularity of pickups is in decline.
Sales have dropped, rebates and other incentives are climbing, even for
companies like G.M. and Toyota that have the newest models on the market.
In March, Bucky Hacker traded his 2002 Dodge Ram Quad Cab pickup for a
subcompact car, the Mazda 3. Mr. Hacker, a student from Oak Ridge,
Tenn., originally bought the Ram to tow a boat, and also thought its
macho appearance would help him attract girls.
But there were drawbacks. “Gas was ridiculous,” Mr. Hacker, 24, said.
“The thing got 13 miles per gallon.” His Mazda averages twice that, or
26 miles per gallon in city and highway driving, and it will be easier
to fit into tight parking spaces at the University of Tennessee, where
he plans to study political science this fall.
Mr. Hacker touches on a reason sales have dropped: a growing sense of
environmental responsibility that has flared along with gas prices.
That, and an uncertain housing market, which is prompting many
contractors to delay buying new trucks, have combined to cut into pickup
truck sales, which are down 5 percent so far this year from a weak
market last year. That is more than double the overall decline in
industry sales, which are down 2 percent this year.
Because of the decline, automakers expect pickups to post their lowest
sales this year since the beginning of the decade, even with incentives.
The average discount on a Dodge Ram is $6,000, up $500 since January,
according to the Power Information Network, which tracks industry
trends. Chevrolet is paying an average of $2,343 in incentives on each
Silverado pickup, double its discounts at the beginning of the year,
when the truck was new.
Even Toyota is discounting the Tundra, which it introduced in February,
by an average of $2,000, the Power data showed.
“We used to have a lot of people getting out of an S.U.V. and into a
truck,” said Scott Satiritz, general sales manager at Massey-Yardley
Chrysler Dodge in Hobe Sound, Fla. Now, he said, “the average customer
is not buying a pickup.”
“They’re into economy cars because of the mileage. Gas prices have
In fact, Ford’s trade-in data shows a number of customers have exchanged
F-series pickups for cars like the smaller Ford Focus or the Fusion
sedan, said the company’s chief sales analyst, George Pipas. That
suggests customers who do not need pickups are not returning for them.
“The people who are buying trucks are buying them because they have to,
not because they want to,” said Steve Magers, general manager of
Elmhurst Ford in Elmhurst, Ill., about 20 miles west of Chicago.
His F-series sales have dropped 10 to 12 percent since the beginning of
the year, with commercial users, like owners of construction companies
and landscaping firms, making up the bulk of his truck business.
Gone are the customers who purchased big trucks because they were “a
status symbol thing,” Mr. Magers said.
Six years ago, 28 percent of consumers nationwide who bought pickups did
so because they liked the way they looked, according to data from CNW
Marketing Research, which follows industry trends. This year, only 16
percent of customers purchased big trucks primarily for their appearance.
As for the buyers who have defected, Art Spinella, the president of CNW,
said: “They won’t come back. They’re finding other vehicles that make
Mr. Spinella said contractors, farmers or ranchers who need pickups for
their businesses will continue to buy them, but not so often as in the past.
That is a reason a Lehman Brothers analyst, Brian Johnson, predicts that
the truck market may continue to decline. If so, it will mean more
problems for Detroit auto companies, all trying to rebound from
billion-dollar losses in 2006.
At Ford, which relies heavily on trucks, pickups accounted for 24
percent of its sales and 41 percent of the company’s gross North
American profits during the last five years, Mr. Johnson calculated in a
That compares with 32 percent of gross profits at G.M., which relies on
pickups for 20 percent of its sales. Pickups contributed 25 percent of
profits at Chrysler, where 18 percent of vehicle sales were pickups the
last five years.
In 2005, the latest year for which he had data available, pickups
generated about $10,000 apiece in gross profits for the auto companies,
Mr. Johnson said. That compares with about $8,000 for the typical
S.U.V., and just $400 on each subcompact car.
The decline in pickup truck sales last year was a big contributor to
Ford’s $12.6 billion loss, a figure that included charges for its
If gas prices were to climb toward $5, helping to send the economy into
a tailspin, Mr. Johnson said that in the worst case, truck sales could
fall by half, to just 7 percent of the American market. That was the
share they held in the late 1980s before automakers enticed customers by
loading up trucks with options and introducing big extended-cab versions.
A 7 percent market share would translate into annual sales of only 1.1
million pickups, or nearly what Ford sold by itself just a few years ago.
Despite economic fears, some dealers say their pickup truck business has
remained steady. While the total number of shoppers has fallen off at
Wade Ford in Smyrna, Ga., the dealership is selling the same number of
pickups that it did a year ago, said Chris Greeson, the new-vehicle
general sales manager. “When they come in to buy an F-150, they know it
isn’t a 30-mile-per-gallon vehicle,” Mr. Greeson said.
Still, Mr. Johnson said, in the long term, automakers must address the
fuel economy of pickup trucks. At G.M., where Silverado sales rose 10
percent in May, thanks in part to the big discounts, fuel economy is a
main focus in marketing the new versions of its pickup trucks, which are
about 10 percent more efficient than the previous models.
“We do have some pluses in our arsenal that are helping us to weather
that storm,” said Paul Ballew, the chief sales analyst at G.M.
Along with better performance for gasoline-powered engines, Mr. Johnson
sees diesel-powered pickup trucks gaining in popularity.
Here, Toyota is at a disadvantage: it does not offer its big Tundra with
a diesel engine, unlike G.M., Ford, Chrysler and even Nissan, which
expects to make a diesel engine available on its big Titan pickup in
2009. That also is when Honda expects to sell diesel engines, although
they will be available first on cars rather than its Ridgeline pickup.
At Toyota, Mr. Johnson said, “with so much focus on hybrids, there is an
inertia when it comes to diesels.”
Company officials insist they are studying diesel engines. Beyond that,
they are satisfied with the early performance of the Tundra, which they
say will meet the company’s goal of selling 200,000 this year
While Toyota is not falling short of its sales goals, Tundra’s
reputation was bruised when it failed to receive a five-star rating in
front-end crash tests performed by the federal government, a standard
achieved by all of Detroit’s big pickups.
Likewise, the company’s decision to stress its more expensive models
equipped with its biggest V-8 engine seemed at odds with Toyota’s
reputation for selling green cars like the fuel-sipping Prius.
Mr. Spinella said he would not be surprised to see Toyota quickly
develop a more basic version of the Tundra, aimed at the same buyers who
purchase cheaper, simpler work trucks from Chevrolet and Ford. Without
them, Toyota may not be able to fully use its new plant in San Antonio,
which it has dedicated to producing pickups, Mr. Spinella said.
At least Toyota put its plant in one state where pickups remain the
vehicle of choice, no matter how high gasoline prices rise. As Mr. Pipas
at Ford said, “You wouldn’t want to park your Escape hybrid in front of
Mickey Gilley’s bar.”