Posted on 08/23/2006 6:38:41 PM PDT by Flavius
Tom Wright's dark-blue GMC Sierra Extended Cab pickup is 12 years old, but so far he's dismissed any thought of replacing it. Although it has 165,000 miles on it, Wright says times are a little too slow in the carpentry business to replace the truck, which he uses for work and to haul around his family.
ADVERTISEMENT Much to the detriment of Detroit's Big Three, people like Wright 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.
Pickup sales overall are off 15.7 percent 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 percent. The No. 2 seller, the Chevrolet Silverado, is off 20.1 percent as the company changes production to a new model. Dodge's Ram line is down 11.7 percent.
Last week, Ford announced that it would cut production by 168,000 vehicles, or 21 percent, in the fourth quarter to bring supply back in line with growing inventories. GM already has cut vehicle production by 7 percent to 8 percent in the third quarter, and Chrysler on Wednesday said it would cut production in the fourth quarter by an unspecified amount. The company already announced a 10 percent cut in third-quarter production, mostly in trucks and sport utility vehicles.
Wright, 45, who lives near Clinton, a village about 60 miles southwest of Detroit, says he gets mailings from his dealer telling him it's time to buy. But as long as the Sierra remains dependable and the economy remains uncertain, he'll keep it.
"I just have a hard time justifying $30,000 for a new truck right now to replace this one," he said while installing new windows in a downtown building. "There's no sense in spending the money right now, the way I look at it."
Industry analysts say the people delaying truck purchases fall into two categories: Those like Wright 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 percent of Ford's sales came from pickup trucks through July of this year, the highest percentage in the industry, according to Autodata Corp. GM's was 25 percent, while Toyota's was at 11.5 percent.
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.
"If they don't do something with the pickup trucks, which is their bread and butter, these guys are just gonna see some very sharp distress over the next several years until they finally turn around," Penniman said.
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 re-calibrate 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.
He disagrees that new products will cut into the F-Series' sales, saying that Ford actually gained share when Nissan Motor Co. entered the full-size pickup market.
It's customers like Wright, though, who also bring hope to industry executives.
No matter what happens to fuel prices or the economy, Wright and thousands of others will someday have to replace their trucks.
"I have to have a truck for what I do," said Wright, who hauls tools and other work supplies in the bed. "I would not think of anything else."
Some analysts expect the pickup market to stabilize later this year, and they don't see a day where cars supplant trucks as the top-selling models in America.
"Large pickups certainly haven't boomed this year," GM Chairman and Chief Executive Rick Wagoner said in a recent interview.
"From our experience, they've held in there pretty well," he said, adding that GM is in the final months of selling relatively old models. "That segment seems to be a little more robust to the fuel economy prices than maybe the large SUVs are."
Still, some analysts are predicting more turbulence for the Big Three as the market continues to shift to smaller, more fuel-efficient vehicles.
If gasoline stays high, manufacturers who rely on pickups and SUVs will continue to suffer, said Ken Bernhardt, professor of marketing at Georgia State University in Atlanta.
"Let's say I'd rather be Honda and Toyota than Ford and GM if gas prices stay at $3 or higher," he said.
My 99 Dodge TD pick up just turned 200,000 miles....
I'll probably replace it when it hits 400,000 or so. It's nice not to make any auto payments. :)
yup, even my used truck was to expensive
30k for 2k worth of metal and cheap plastic
they are out their minds
So far all have used trucks. We should have a tail gate party:')
YEP, I got an 88 toyota wagon for the in-town running around and my 4WD is parked for use that requires real work
They act like this is a surprise. Everyone's been screaming for years over it, and every new auto show they unveil something that's bigger, heavier, and duller than anything ever built.
Someone has the pay the union workers benefits. $800 car notes are more than my first house payments. About time people wise up to the automakers.
Nissan's going to be OK - their 2500 with (allegedly) a Cummins diesel will be out soon. Also, they didn't bet the farm on pickup trucks.
GM's bet everything on their new T900 series trucks, and it's not going to work.
Toyota's capacity expansion is going to be taken up with overseas sales, if it's not taken domestically.
Heavy Duty Chevy 4wd pick-up trucks can't seem to consistently break 10mpg. Dodges can't make a tranny that you don't just throw away.
We just bought a 2001 Chevy S10 pickup. It's small, but it meets our needs. We're pleased as punch with it!
Mine is a '90 Chevy Silverado.....320,000 miles on her....but I can't justify spending 32k (or in that range) on a new one....too damned many very expensive bells and whistles for what I need.
Give me an honest truck that will do the job and forget about the stupid "creature comforts" that the "Girlie-Boy" Metrosexual seems to crave and I'll buy it in a heartbeat!
'91 GMC Sierra SLE with 125,000 miles and no intention of buying a new one. No monthly notes, insurance less than $250/year and a pickup that turns more heads than a fire-red Corvette convertible driven by a blonde. I'm too old to worry about turned heads though. It's the functionality of a truck that appeals to me. I like them used, clean, and cheap.
I did find a truck I wanted to buy a couple of years ago though. Metalic pink/purple. Bucket seats, tinted, the works. I didn't buy it though because my husband refused to even sit in it.
It is very instructive to contrast GM and Nissan's approaches to fuel economy issues among their cars.
Nissan: We're making CVT's available on all our cars in the next year or so, we're introducing a hybrid car in 2007, and we're going to make our cars more fuel efficient without sacrificing power or driveability.
GM: We're going to install a 6 speed automatic in all our sedans in 2010!
Um.... geee... what makes more sense?
Turbodiesels like his create less harmful pollution than most cars...
I heard something the other day that even though CVT is superior, when people drove a car with it, they missed the hard shifting. They thought the car was underpowered.
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