Friday, May 2, 2008

Pickup Sales Plunge

Passenger-car sales climbed 4.5% in April, but sales of light trucks fell 7.2%, the worst drop since 1999

Everyone knows gas prices and the crisis in homebuilding have interrupted Americans' love affair with full-size pickups, the best-selling vehicles in the U.S. market by far.

But they'll be back—right?

Sure they will, said General Motors (GM), Toyota Motor (TM), and Chrysler, in separate conference calls on May 1, as the U.S. auto industry announced that April sales fell 7.2% from the year-ago month, to 1,242,417 trucks, the worst April since 1999.

No, they won't, said Ford Motor (F). "Here's a news flash for people who are expecting the full-size pickup market to come back: Those people are gone. I don't think we're done seeing people leave the segment," said George Pipas, Ford's U.S. sales analysis manager

Down a Steep Hill

Passenger-car sales gained 4.5% in April. But light trucks, including pickups, minivans, SUVs, and crossovers, fell 17.4% for the month, according to Woodcliff Lake (N.J.)-based AutoData, which provided the sales numbers for this story.

Year to date through April, total light-vehicle sales (that is, excluding medium- and heavy-duty trucks) were down 7.8%, to 4,819,709 units. Industry sales are on track for the worst year in at least a decade. Sales at Chrysler fell 23.5%, to 147,751 vehicles, in April, vs. the year-ago month. GM dropped 16.1%, to 256,058. Ford fell 11.8%, to 188,527.

The biggest Japanese brands all gained, as customers continue to switch to smaller, more fuel-efficient vehicles: Toyota gained 3.4%, to 217,700; Honda Motor (HMC) was up 6.3%, to 134,400; Nissan (NSANY) climbed 6.7%, to 75,855.

The poor industry results so far this year motivated Toyota to cut its full-year industry forecast by almost 1 million units, to about 15.2 million light vehicles.

Toyota and GM Are Optimistic

Bob Carter, Toyota Div. group vice-president and general manager, said Toyota still expects sales to improve in the second half relative to the first half. He estimated the seasonally adjusted annual sales rate for April at a dismal 14.6 million to 14.7 million light vehicles. That is, adjusting for historical month-to-month variation, if sales continued at the current pace for a full year, that would be the estimated total for 2008.

He also said Toyota expects the market to come back for full-size pickups like the Toyota Tundra in the 2009-10 time frame, even if sales are slow now. "Consumers are delaying their purchases now, but it's going to recover in the future," Carter said.

Mark LaNeve, GM North America's vice-president for vehicle sales, service, and marketing, made similar comments in a separate conference call, even though GM has cut its production of full-size trucks, which were already affected by a work stoppage. "We certainly think the pickup truck market will bounce [back], but it's hard to say how quickly and how high that will go," LaNeve said. "We have a very low inventory, and that's a positive for us in this kind of environment. We're in a position to weather this environment…we're in position to step on it [and increase production] if we see some recovery in economic activity,"

Trading in Pickups for Smaller Cars

Chrysler spokesman Stuart Schorr said pickups would eventually recover, but the automakers will have to come up with more fuel-efficient vehicles. "We don't see this market as a sea change against pickup trucks, but it is a challenge. That's why we're developing hybrids, for instance. But Americans will continue to want pickup trucks," he said.

Pickups may eventually recover from today's low levels of around 11% of total sales. But sales could get even worse in the short term, and they probably won't return to the record levels of 2005, when full-size pickups made up about 15% of total U.S. sales, Ford's Pipas said.

"If you look at the top-selling small cars and the top 10 trade-ins on those cars, there's a full-size pickup on every list," Pipas said.

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