Rising interest rates and petrol prices are continuing to clobber sales of full-size pickup trucks in the US, prompting their makers to consider new incentives to clear excess stocks.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
A new government report on Monday (10 July) said the average cost of petrol was at its second highest level ever – almost $3 a gallon.
As Asian brands have gained footholds in other market sectors the big pickup truck segment has been a source of comfort and profitability for the Detroit-based Big Three automakers (Nissan’s Titan competitor, though a fair effort, reportedly has not been as successful as hoped, even with its modest volume aspirations).
Reuters noted that the domestic vehicle makers had expected SUV sales to drop this year but hoped that replacement demand from small businesses would help hold pickup truck volume reasonably steady.
But industry watchers were surprised as truck sales nosedived almost 29%, analysts said.
“There were indications that some large pickup buyers are deferring purchases until they see what happens with gas prices,” Bear Stearns analyst Peter Nesvold told the news agency.
That will surely be causing concern in Detroit board rooms because Ford’s F-series trucks are the best-selling vehicles in the US, followed by GM’s Chevrolet Silverado trucks, while Chrysler’s Dodge Ram is its top-selling model line there.
Sales of pickup trucks slipped to 1.4m units during the first half of 2006 from nearly 1.6m a year ago.
Paul Taylor, chief economist at the National Automobile Dealers Association, told Reuters Detroit would have to gear up to offer more aggressive discounts because inventories of unsold trucks were piling up on dealer forecourts – 1.02m at the end of June, up 11% from a year ago.
“High current inventories suggest that we will see strong sales of pickup trucks in August and September,” Taylor said while other analysts agreed that pickup price war would heat up.
GM, in particular, needs to shift old models to make way for redesigned models due to reach dealers later this year as the 2007 model year selling season begins in earnest.
Analysts have noted that incentives are up this summer but the offers are not as good as last year when deals such as so-called ‘employee discount’ abounded.
