Even Trucks Hit the Wall in an Erratic 2007
By MICHELINE MAYNARD
January 4, 2008 - The New York Times
DETROIT — They may be built like a rock, be able to haul boulders and hail from deep in the heart of Texas. But pickup tricks cannot stand up to tough economic times.
Final sales tallies announced Thursday showed that 2007 was the year the pickup hit the wall.
That’s bad news for auto companies, which have long relied on pickups as a steady supplier of hefty profits as they responded to consumers’ shifting tastes for other vehicles.
Even when sport utility vehicles lost their allure earlier this decade, pickups hung on, fueled by the need among builders and business owners to replace their workhorses, and by the need of some drivers to own the biggest wheels on the block.
But analysts say that high gasoline prices, the housing slump and the uncertain economy are causing pickup drivers to hold off trekking to the dealer.
“Pickup truck sales are victims of the economic conditions we’re now in,” said Ron Pinelli, president of Autodata, an industry statistics firm in Woodcliff Lake, N.J.
At Ford Motor, sales of the F-series pickup fell 13.2 percent in 2007, even though the F-series was the best-selling vehicle in the country for the 31st straight year.
General Motors, whose new Chevrolet Silverado got off to a strong start when it was introduced last winter, watched inventories pile up on showroom lots in the fall. Sales of Silverados, which now carry rebates of up to $2,000, fell 2.8 percent in 2007.
G.M. is cutting truck production this winter and will eliminate several thousand union jobs.
Meanwhile, Toyota missed its sales target of 200,000 new Tundra pickups in 2007, winding up about 4,000 short. It was a rare disappointment for the Japanese automaker, which deliberately sets conservative sales goals and generally exceeds them.
Collapsing pickup sales were a primary reason that Detroit plummeted to its lowest market share ever last year, taking just 51 percent of American sales, versus 49 percent for its foreign rivals, according to an Autodata estimate.
Over all, industry sales were the lowest since 1998, at 16.1 million vehicles, down 2.5 percent from 2006. Indeed, the slide of Ford’s F-series helped Toyota pass the company to take second place in the American market for the first time, behind G.M.
The drop in the pickup truck market follows a slump in sales of S.U.V.’s, whose sales are down one-third from their peak in 2002.
But there are reasons Detroit worries more about lost pickup sales than S.U.V.’s. After all, S.U.V. drivers often simply shifted to other models. Many switched to crossover vehicles, which are S.U.V.’s built on car underpinnings, making them easier to handle and more fuel-efficient.
But pickup truck owners, known for their intense brand loyalty, rarely buy another type of vehicle, especially if they use their trucks for business.
Toyota thought it could hit its sales goal for the Tundra by courting commercial customers, such as ranchers, construction workers and landscaping crews. Executives were heartened by warm reviews for the truck, which Automobile Magazine called “a big truck with the mindset of a faithful servant.”
Instead, the market softened just as the latest Tundra landed in showrooms, causing its sales to fall short.
Even so, Tom Libby, senior director of industry analysis at the Power Information Network, a division of the research firm J. D. Power and Associates, said Toyota’s shortfall was not significant.
“They did basically what they said they were going to do, in a segment where the other manufacturers would do almost anything to protect themselves,” he said.
Given the positive reviews for the Tundra, Mr. Pinelli of Autodata said it was clear the problem was not the Tundra itself, but the selling environment. Long-term, he said, the Tundra would most likely attract more buyers once the overall market rebounds.
In the short-term, however, auto companies and industry analysts are predicting some of the weakest sales in more than a decade — just in time for another wave of newly designed pickups arriving this year.
Ford, for example, will show the latest incarnation of the F-series in 10 days, during preview days at the Detroit auto show.
Meanwhile, Chrysler has a new version of the Dodge Ram that it plans to unveil at the Chicago auto show in February. Ram sales fell 2 percent in 2007, and Chrysler introduced a new incentive program Thursday, offering interest-free loans or $2,500 rebates on many of its vehicles. The deals run through Feb. 28.
Toyota will show a concept pickup at the Detroit show called the A-BAT, for “advanced breakthrough aero truck.”
Jalopnik.com, a Web site for automobile enthusiasts, likened its futuristic looks to those of the Honda Ridgeline, another victim of the pickup truck woes of 2007.
Sales of the Ridgeline, which is based on the Honda Pilot S.U.V., fell 15 percent in 2007, even though Honda posted its 11th straight year of higher sales in the United States. Nissan’s Titan fell 9.2 percent from 2006.
Mr. Libby said auto companies, who have never hesitated to offer big rebates on their big trucks, would fight hard to attract customers. “I don’t see any lessening of the competition going forward,” he said. “If anything it’s just going to get worse.”
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com