Much to the detriment of Detroit’s Big Three, consumers are delaying truck purchases, cutting into profits and forcing Ford Motor Co., General Motors Corp. and DaimlerChrysler AG’s Chrysler Group to idle some assembly lines.
The Associated Press reported that pickup sales overall are off 15.7% in the first seven months of the year from the same time last year.
Sales of Ford’s F-series pickups, the highest-selling vehicles in the nation, are down 12.3%. The No. 2 seller, the Chevrolet Silverado, is off 20.1% as the company changes production to a new model. Dodge’s Ram line is down 11.7%.
Last week, Ford announced that it would cut production by 168,000 vehicles, or 21%, in the fourth quarter to bring supply back in line with growing inventories. GM already has cut vehicle production by 7% to 8% in the third quarter.
And Chrysler on Wednesday (Aug. 23) said it would cut production in the fourth quarter by an unspecified amount. Most of the reductions will be made on the Dodge Durango SUV and Dodge Ram pickup, CEO Tom LaSorda said. The company already announced a 10% cut in third-quarter production, mostly in trucks and sport utility vehicles.
Industry analysts say the people delaying truck purchases fall into two categories: Those who use pickups primarily for work and those who use pickups as their personal vehicles.
Most sales are for personal use, and analysts say that with $3 per gallon gasoline, many of those customers are leaving the market for more fuel-efficient vehicles.
“The customers who don’t have a need for the product have opted for something else,” said Tom Libby, senior director of industry analysis for J.D. Power and Associates.
So the Big Three, which rely more on trucks for profits than their foreign competitors, are likely to face more hard times as truck demand softens even further in the second half of the year, analysts say.
Nearly 32% of Ford’s sales came from pickup trucks through July, the highest percentage in the industry, according to Autodata Corp. GM’s was 25%, while Toyota’s was at 11.5%.
Kip Penniman, an analyst with KDP Investment Advisors in Montpelier, Vt., predicted that Ford would be particularly hard-hit later in the year as GM and Toyota come out with brand-new pickups that could cut into the F-series’ market share.
Ford’s own take on pickups isn’t as dire. Ben Poore, marketing manager of Ford’s truck group, said the market already is starting to stabilize, even though it has lost some buyers who don’t need pickups for work.
“As people get used to and recalibrate to the gas price, they tend to come back into the pickup market,” he said.
Poore said while home building and the general economy may be down in some regions, it’s booming in others, so the demand for pickups should remain strong.