US: Buyers delay truck purchases
Much to the detriment of Detroit's Big Three, potential buyers are delaying truck purchases, cutting into profits and forcing Ford, General Motors and Chrysler Group to idle some assembly lines.
Pickup sales overall are off 15.7% in the first seven months of the year from the same time last year, according to The Associated Press (AP).
Sales of Ford's F-series pickups, the highest-selling vehicles in the nation, are down 12.3%, the No. 2 Chevrolet Silverado is off 20.1% as the company changes over to a new model and Dodge's Ram line is down 11.7%, the report said.
Ford last week 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 said it would cut production in the fourth quarter by an unspecified amount. The company already announced a 10% cut in third-quarter production, mostly in trucks and sport utility vehicles, AP noted.
Industry analysts told the news agency people delaying truck purchases fall into two categories: those who use pickups primarily for work and those who use them as personal vehicles.
AP noted that most sales are for personal use, and analysts reportedly say that with $US3 per gallon petrol, 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," Tom Libby, senior director of industry analysis for JD Power and Associates, told The Associated Press.
The analysts say the Detroit Big Three, which rely more on trucks for profits than foreign competitors, are likely to face more hard times as truck demand softens even further in the second half of the year.
Citing Autodata, AP said almost 32% of Ford's sales came from pickup trucks to the end of July this year, the highest percentage in the industry. GM's was 25%, while Toyota's was at 11.5%.
Kip Penniman, an analyst with KDP Investment Advisors in Montpelier, Vermont, reportedly 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 this week announced a new diesel engine for its Super Duty line, which is aimed more at the work than leisure market, though the smaller F-250 versions can be beautifully specified for private leisure buyers with items such as a double cab with four individual leather seats.
"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 told The Associated Press.
Ford's own take isn't as dire, the report noted. Ben Poore, marketing manager of Ford's truck group, said the market already is starting to stabilise, 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 told AP. Poore added that, 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 reportedly disagreed that new products will cut into the F-Series' sales, saying that Ford actually gained share when Nissan Motor entered the full-size pickup market [with its Titan].
Some analysts told AP they expect the pickup market to stabilise 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 reportedly 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."
Some analysts are nonetheless predicting more turbulence for the Big Three as the market continues to shift to smaller, more fuel-efficient vehicles, AP said.
If gasoline stays high, manufacturers who rely on pickups and SUVs will continue to suffer, Ken Bernhardt, professor of marketing at Georgia State University in Atlanta, told The Associated Press, adding: "Let's say I'd rather be Honda and Toyota than Ford and GM if gas prices stay at $3 or higher."