Light-Duty Pickups
Records are made to be broken, and it's happening again in sales of light-duty pickup trucks.
Tom Berg
Senior Equipment Editor
If you can get as good a price on a new car or truck as somebody who works for a manufacturer, wouldn't you at least look into it? Consumers and commercial users of full-size pickups – by far the largest segment in Classes 1 and 2 – did so this summer, snapping up vehicles in unprecedented numbers. Pickup sales so far this year are up considerably over 2004, which itself was a record year.
To be sure, results have been skewed by special "employee" pricing that was initiated in June by General Motors, then matched by DaimlerChrysler and Ford. Buyers simply knew good deals when they saw them, and selling prices were even lower than they usually are at the close of a model year. Brokers and buying services, which negotiate prices on behalf of haggle-wary customers, admitted they could do no better. The Big Three extended their programs through Labor Day and they were still running at this writing.
GM's program generated a well publicized 48% rise in sales of cars and light trucks in June '05 compared to June '04, and executives said the problem by mid-August was lack of inventory to support continued demand. There are far worse problems, everyone in the business would acknowledge. Like, will there be a big fall-off after Labor Day and will the public – already hooked on rebates and other incentives that effectively reduce selling prices – demand continuous deal sweeteners and resist high sticker prices? GM, for one, said it would look at lowering its suggested retail prices when employee pricing ends.
It's not known how many dual-use sales to people who use pickups for both personal and work duties resulted from the programs. And commercial sales were largely unaffected, because the programs excluded certain models and fleet buyers strike their own deals – often appreciably removed from sticker prices. But a continued strong economy pushed commercial sales in all truck weight classes to strong, if not record sales, especially at the heavier end.
One puzzle is why shockingly high fuel prices have not damaged the economy and caused people to hunker down with what they already have in the way of vehicles, as happened in the Oil Crises of 1973 and '79. Where are they finding the money to pay for $3-a-gallon gas and even costlier diesel? Why aren't they changing their driving habits, such as slowing down, to save fuel?
Well, unscientific observations by this writer on a recent cross-country trip suggest that traffic is moving a bit slower, and that includes big rigs. And sales of large, heavy sport-utility vehicles continue slipping while those of more economical car-based sport utes rise. So people do seem to be adjusting to this pricey new world.
More to the point of this article, why do most buyers of full-size light-duty pickups still choose gasoline V-8s and not more economical sixes, which are available, and why don't they clamor for thrifty diesels, like buyers of heavy duty pickups? For that matter, why don't they switch to compact and mid-size pickups?
Because people still want performance and generally will not pay the price premiums for diesel engines, the manufacturers answer. Buyers of big diesel pickups do appreciate their greater fuel economy over big-displacement gasoline engines. But a bigger reason is their diesels' hefty torque and pulling power – diesels really are better for pulling heavy trailers – and the accompanying bragging rights.
Manufacturers say that they are still investigating the feasibility of introducing smaller diesels into light-duty pickups, labeled 1500 by GM and Dodge and F150 by Ford. But gasoline engines still make sense because they cost less to buy than diesels. Gasoline engines have steadily improved in economy and durability, especially since the late '90s. And it's still easier to fill 'er up with gas than diesel.
Easier includes price. In many parts of the country, diesel costs more than regular unleaded gasoline. You're not much ahead if you get seven more miles per gallon with your diesel but pay 30 cents more a gallon when you fill up, and you've paid $5,000 more for the diesel in the first place.
Meanwhile, stricter exhaust emissions limits require expensive development and equipment to meet. The '07 limits are expected to add many dollars to the premium for a light-duty diesel – how much is still unknown, though one executive believes it will be $2,000 to $3,000 more.
Diesel fuel's higher price in America is an anomaly in the petroleum world, with diesel cheaper almost everywhere else. That's because many foreign governments tax diesel less than gasoline to encourage fuel savings. But the U.S. Congress and most state legislatures tax the two motor fuels the same, and gasoline treated with ethanol produced from American-grown corn and other crops gets a tax break in some states. With our high standard of living, there's a lot of travel, much manufacturing and distribution of raw and finished goods, and therefore a lot of consumption of diesel and aviation fuel.
Jet fuel and heating oil, still heavily used in the Northeast, compete with diesel at refineries, which drives up costs.
As to vehicle size, smaller pickups can and do make a lot of sense for many people, because they weigh less and need smaller four-, five- and six-cylinder engines. But folks can do more with full-size pickups, say manufacturers. Full-size pickups are roomy and comfortable, can carry big and heavy loads of "stuff" that people inevitably acquire, and can tow a hefty trailer when the need arises.
And as we all know, more usefulness adds to resale value.
Indeed, the market for compact and midsize pickups is shrinking, even though most manufacturers have come out with brand-new models in the last year or two. Notably, most new models are mid-size, replacing compacts. Slightly bigger products and higher fuel prices might put a pause to the sales erosion in this segment, some think.
Commercial users of small pickups include couriers, auto parts runners and pest control specialists. But most small pickups are bought by consumers, so we include only full-size light-duty pickups in our product descriptions.
And because Nissan and Toyota, while offering highly capable half-ton pickups, do not seek commercial customers, we limit the listings to products from the Big Three: Dodge, Chevrolet/GMC and Ford.
Truck Model Roundup continued...
