Big pickups, SUVs gain share

Companies stick to small-car plans

DETROIT — After hitting bottom in May and June, U.S. market shares for full-sized pickups and SUVs have rebounded. But automakers aren't celebrating.

In September, full-sized pickups accounted for 14.1 percent of total U.S. light-vehicle sales, according to J.D. Power's PIN data. That's up sharply from 9.2 percent in May. Big SUVs rebounded modestly to 2.5 percent of market share in September, up from 1.9 percent in May.

But with overall industry sales slumping, even an increase in market share does not generate sales comparable to the hey-day of big trucks. Likewise, wholesale auction prices for used pickups and SUVs have perked up, but still lag behind prices from earlier this decade.

Truck sales started to sag late last year, then plunged in the spring as gasoline topped $4 a gallon. And though gasoline prices have fallen sharply since then, automakers expect higher fuel prices ahead. The future, they say, is in fuel-efficient cars and technology.

"As a company, we are looking at a future of high gasoline prices," says Yvonne Malmgren, manager of global sales and incentive communications for Chrysler LLC. "That is what we expect, and we're aligning our business plans with that idea in mind."

In fact, last week Chrysler said it will close its Newark, Del., assembly plant, which builds the Dodge Durango and Chrysler Aspen SUVs, by Dec. 31 — a year earlier than planned. And Chrysler has announced that the next-generation Dodge Ram pickup will have a hybrid powertrain.

Other automakers are sticking to plans for small cars and technology such as hybrids, fuel-injection engines and possibly electric cars.

Gasoline down, share up

The automakers are doing so despite some indication that lower gasoline prices have propped up sales of pickups and SUVs:

-- Gasoline prices. As of Friday, Oct. 24, the national average price for regular gasoline was $2.78 a gallon, down from a high of $4.11 a gallon on July 17, according to the AAA Web site www.fuelgaugereport.com.

-- Market share. Full-sized pickups accounted for 14.1 percent of U.S. sales in September, an improvement since last May. But the pickups' market share still lags behind the segment's recent peak in July 2005, when large pickups accounted for 18.2 percent of U.S. sales .

-- Auction prices. The average price for a used full-sized pickup in September was $9,834 — up 13.2 percent from the low point of $8,686 in June, according to the auction company ADESA Inc., of Carmel, Ind. Similarly, used full-sized SUVs sold for an average price of $10,507 in September, up 7.6 percent from $9,764 in June. But in both cases, prices were several thousand dollars per unit below recent years.

Consumer interest in the Cadillac Escalade started rising again at Baker Cadillac in Leominster, Mass., when the price of gasoline dropped from $4 a gallon to $3.50, says owner Joel Baker. But most carmakers say falling fuel prices are temporary and are sticking to their small-car plans.

Temporary relief

Lower gasoline prices are only temporary, most automakers believe. "The reason the gas prices have come down is because of the overall effect of the financial markets on the economy," says John McDonald, a General Motors spokesman. "Demand for gasoline and demand for oil has dropped significantly because of the poor credit market."

GM is basing its product planning on "higher fuel prices, not lower," McDonald says.

A spokeswoman for Nissan North America Inc. in Nashville says there has been no indication of rebounding truck or SUV sales for the Nissan and Infiniti brands.

Likewise, Toyota Motor Sales U.S.A. Inc. spokesman Xavier Dominicis sees no long-term movement back to big trucks. "The buying public often has a short memory," Dominicis says. "But we're looking at the numbers this month, and there's no discernable evidence of anything changing."

Incentive effect

Moreover, the increase in full-sized truck share could be attributed to the high incentives that most manufacturers tagged onto trucks this fall to move out old inventory.

Most industry observers think there won't be a real bounce in pickup or SUV sales until the housing market improves. That's at least 12 to 18 months away, says Ford sales analyst George Pipas. "Our view remains that small cars and mid-sized vehicles will continue to grow across the market," Pipas says.

Still, some dealers say the lower gasoline prices have meant higher floor traffic. John Moses, 41, general sales manager at Abercrombie Chevrolet in Hartselle, Ala., says truck sales have perked up.

"We're selling more trucks than we have in the past three to four months," Moses says. "You can attribute that to gas prices and, I think, to the big incentives that GM is currently offering on the '08 trucks."

Says Joel Baker, owner of Baker Cadillac in Leominster, Mass.: "When gas was at $4 a gallon, we went for probably a 50-day period when we didn't show any Escalades. When it hit $3.50, we started seeing some traffic again."

Chrissie Thompson contributed to this report

You can reach Jamie LaReau at jlareau@crain.com

0

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters