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Report: Large Pickups Drive August Auto Sales

September 10, 2012 by · Leave a Comment 

Big pickups carried U.S. auto sales to their highest level in three years, according to an Associated Press report.

Demand for full-size pickups jumped 16% in August, helping to make it the strongest sales month since August 2009. Overall auto sales increased 20% from a year earlier to nearly 1.3 million, according to Autodata corp.

The rising demand shows that businesses need to replace aging trucks and feel more confident about the recovery in U.S. housing — an industry where pickups are essential for hauling equipment and crews.

“Businesses don’t usually go buy a fleet of trucks unless they have good reason to believe that business will be ramping up,” said Jesse Toprak, vice president of market intelligence for the TrueCar.com auto pricing service

Ford, GM and Chrysler, the biggest makers of full-size trucks, notched double-digit gains in overall sales last month.

In pickups, Ford’s F-Series, the top-selling vehicle in America, saw a 19% sales increase, as did Chrysler’s Ram pickup. Sales of General Motors’ Chevy Silverado rose 4%, while the GMC Sierra was up 9%. Toyota’s struggling big truck, the Tundra, posted a huge increase of 68%.

The rising demand helped push total U.S. auto sales last month to an annual rate of 14.5 million. That’s the best monthly sales pace since the government’s “Cash for Clunkers” rebate program in August of 2009.

Pent-up demand is part of the reason for last month’s truck increase. The average vehicle on U.S. roads is nearing 11 years old, and some are simply wearing out.

But automakers and industry analysts say the economic recovery — new housing in particular — is also starting to make buyers feel more comfortable about a big-ticket purchase.

There’s a direct correlation between the housing market and pickup sales, they say. When people who work in housing or other construction are more confident, they tend to invest in equipment. Some may be adding crews and need vehicles to get them to and from job sites.

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CAFE Standards Boosting V-6 Pickup Popularity

September 23, 2011 by · Leave a Comment 

Big pickups with small V-6 engines — the red-haired orphans of truck country — always occupied the back rows on dealers’ lots.

As reported by the Dallas Morning News, no one but fleet buyers and bargain hunters ever wanted them anyway.

But this year, as automakers reach for every tool to prepare for dramatically tougher fuel economy standards in 2016, those orphans are shoving aside king V-8s, even in bigger-is-better Texas.

“We’d put them (V-6s) on the front row today if we could get them,” said Randall Reed, who owns nine dealerships in Texas, including Prestige Ford and Park Cities Ford/Lincoln in Dallas.

The challenges ahead are daunting.

Cars’ fuel economy will need to increase more than 29%, from the current 30.2 miles per gallon to a 39 mpg average by model year 2016.

Truck mileage must increase 27.6% — though that number is misleading because no full-size pickup can even achieve the current standard of 23.5 mpg, including hybrids.

And those are just the first steps. By 2025, automakers’ fleets will need to average 54.5 mpg before exemptions for full-size trucks are figured into the complex formula.

“It’s definitely a radical step up from where we were,” said Mike Omotoso, senior manager of global powertrain forecasting at J.D. Power and Associates. “The party’s over.”

Consider this: Only two of the top 10-selling vehicles in the U.S. last year — both cars — averaged 30 mpg. The rest didn’t even meet current standards.

Called corporate average fuel economy, or CAFE, the federal standards were enacted decades ago to cut the nation’s dependence on foreign oil and, more recently, to reduce greenhouse gases.

For years, CAFE standards have remained flat, allowing automakers to focus on sexier — and more profitable — attractions such as bigger, more powerful engines.

Manufacturers often had to pay millions in fines for not meeting CAFE standards, but they were considered just a cost of doing business.

As a result, Todd Turner has little sympathy for the auto industry’s CAFE struggles.

“Think about the millions that manufacturers sunk into size and performance over the last two decades,” said Turner, president of Car Concepts of Thousand Oaks, Calif. “It could have been devoted to fuel economy.”

Still, most automakers now need to invest billions to improve fuel economy — and those costs will likely be passed on to consumers.

Fuel-saving technology, more efficient engines and transmissions, and other equipment will cost an average of $2,700 per vehicle, Omotoso said. What is still unclear is how much of that will be added to the sticker prices.

“We could have a real disconnect where people will perceive that they are getting less car and being charged more,” said George Hoffer, a business professor at the University of Richmond who follows the auto industry. “The government is effectively ordering all this technology. What if buyers won’t pay for it?”

Ford Motor Co., which, like many automakers, still makes most of its profit from trucks, is encouraged by the early success of its new V-6 engines — though the company realizes that even sales stars like the EcoBoost V-6 are just a start.

“This is the first time since 1985 that we’ve sold more V-6s than V-8s — a very, very pleasant surprise that sets us up to keep building toward those (2016) standards,” said Doug Scott, truck marketing manager.

 

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LeaseTrader.com: Sales Up for Tow Vehicles

July 7, 2011 by · Leave a Comment 

LeaseTrader.com, the most recognized name in car leasing, says demand for mid-size trucks and SUV leases has rebounded in just a short time since gas prices have fallen from their springtime highs around $4 per gallon.

The Energy Department’s Energy Information Administration said this week that national gas prices have dropped approximately 46 cents since early May, currently sitting near $3.50 per gallon. Gas prices have been a largely discussed topic since February when they rose sharply, peaking at a national average of $3.97 in early May.

Demand for vehicle leases in the mid-size truck and SUV category on LeaseTrader.com has risen an average of 8.3% compared with June 1 levels. The trend bodes well for the recreation vehicle industry, which has seen a jump in lightweight trailer sale capable of being towed by smaller trucks and SUV’s.

“Throughout spring when gas prices rose sharply, the anticipated ascension of fuel-efficient vehicle demand came to fruition,” said Sergio Stiberman, CEO and founder of LeaseTrader.com. “But interest in mid-size trucks and SUVs was more prevalent than in 2008 because of a stable economy. With gas prices easing off their highs, car lease shoppers have started to inquire about truck and SUVs, feeling less financial pressure at the pump.”

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U.S. Pickup Truck Sales Hit Bump in the Road

June 17, 2011 by · Leave a Comment 

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.

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