Sales of full-size pickups, an economic indicator and a profit driver for the Detroit Three, have stalled this spring.
USA Today reported that after proportionately outgaining other market segments in January and February, sales of full-size pickups have been worse than the total U.S. auto market’s performance for the last three months, compared with the same months in 2010.
In May, pickup sales were 12.7% lower, while the industry fell 3.7%, amid fears that the economic recovery is losing speed. Pickup sales usually correlate with needs of workers who require hauling and towing capacity. Last month’s U.S. jobless rate rose from 9% to 9.1%, and the number of jobs created was the fewest in eight months. Another indicator — the Dow Jones industrial average — has lost 6.7% since the start of May. Home prices continue to slide.
Still, most analysts say they believe the pickup slowdown is a bump and expect sales — hurt by high gas prices that peaked in early May — to improve by late summer.
“We were seeing a reaction from people starting to say, ‘I’m hearing some mixed signals in the economy, and I don’t know if I can handle $4-a-gallon gas and a new truck payment,’” Ford analyst George Pipas said. “It’s just temporary.”
But even if the economy looks better and pickup sales improve late this summer and this fall, few industry observers expect pickups will reach their boom sales levels from the last decade, when gas was cheap and home sales were brisk.
Pipas says that means Detroit automakers need to shift to leaning more on car and crossover vehicle sales for profits. Ford is counting on pickup sales to recover to 12% to 13% of the U.S. market, still down from the 14% to 15% they represented several years ago. Pickups were 10% of sales in May.
“I have not seen any traffic with full-sized pickups,” Grand Rapids, Mich., Chevy and GMC dealer Todd Wenzel said. “Nobody postponing (a purchase), nobody buying — just very, very soft.” That sometimes happens in the spring, he said.