Fulllsize Truck Transaction Prices Rise at Twice the Industry Average
06-11-2013, 01:30 PM
#1
TECH Veteran
Thread Starter
Join Date: Feb 2004
Location: Phoenix, AZ Hometown: Aberdeen, SD
Posts: 4,231
Likes: 0
Received 0 Likes
on
0 Posts
Fulllsize Truck Transaction Prices Rise at Twice the Industry Average Prices for large pickups, including heavy-duty models, have risen to almost $40,000, from about $31,000 in 2005
Nick Bunkley
Automotive News
June 10, 2013 - 12:01 am ET
It feels like the good old days for the Detroit Three, with big pickups flying off dealership lots and plants running full out to fill orders for large, profitable models.
"It's a great time to be in the truck business," said Kurt McNeil, vice president of U.S. sales operations at General Motors, which starts shipping redesigned versions of its full-sized pickups to dealers this month.
In many ways, this may be an even better time than before the recession.
Although volumes remain well below the previous peaks, average transaction prices for full-sized pickups have increased at more than double the average rate for the industry since 2005, according to Edmunds.com. And manufacturers are not creating demand artificially with unsustainable discounts.
Edmunds says average transaction prices for large pickups, including heavy-duty models, have risen to almost $40,000, from about $31,000 in 2005. That equates to an 8 percent gain after adjusting for inflation.
And the housing market is just starting to give the auto industry a tailwind that some in the industry say could bring pickup sales back to the levels Detroit enjoyed nearly a decade ago.
Also, the Detroit Three no longer have to spend their truck profits just trying to cover the crushing legacy costs and overhead expenses that helped land two of them in Bankruptcy Court.
"It allows them to do things and make investments that in the past they neglected," Brian Johnson, an analyst with Barclays Capital, said in an interview.
In May, full-sized pickups accounted for about one-third of the 8 percent increase in U.S. sales volume from a year ago. For the first five months of the year, the segment was up 21 percent while the industry rose only 7 percent.
2 million pickups
At that rate -- and most analysts expect the industry's selling rate to rise in the second half -- deliveries of full-sized pickups would reach 2 million units for the first time since 2007, before surging gasoline prices pushed many pickup buyers to seek more efficient alternatives.
"What we're really encouraged about is that the 2010-12 improvement came without the benefit of housing. That was a missing piece of the puzzle," Doug Scott, marketing manager for Ford Motor Co.'s truck group, said in an interview. "Now it looks like that housing element is going to be there.
"That could really drive full-sized pickup sales higher in the future and perhaps put us in a position where we approach those 2004-05 levels. It wasn't that long ago that most people thought that wasn't in the cards."
In May, Ford sold 71,604 F-series models, 31 percent more than a year ago and the most in any month since August 2006. Sales rose 24 percent for GM's full-sized pickups -- the Chevrolet Silverado and GMC Sierra -- and 22 percent for Chrysler Group's Ram. Those four nameplates accounted for one of every eight vehicles sold last month.
Ford, which sold more than 900,000 F-series models in both 2004 and 2005, is on track to sell nearly 800,000 this year. But because the average transaction price for the F series is up more than $10,000 since 2005, this year's sales of that one nameplate would generate almost $5 billion more than back then, or about the same amount after adjusting for inflation.
As much as the Detroit Three have focused on improving their car lineups in recent years, nothing is better for their bottom lines than growth in pickups. The F series accounted for 90 percent of Ford's profits, while the Silverado and Sierra generated two-thirds of GM's earnings in 2012, Morgan Stanley analyst Adam Jonas has said.
Analysts say pickups will continue to outpace overall industry growth as the market climbs to at least 16 million units next year, driven by demand from home building, the energy boom and even a modest resurgence in so-called urban cowboys -- people who don't need a truck for work but still buy one, oftentimes splurging for plush, high-priced versions.
"The truck segment really shows no sign of slowing down," said Alec Gutierrez, senior market analyst for Kelley Blue Book. "A lot of those consumers who sat on the sidelines are now jumping back into the market, even though they don't have a job in construction and they're not hauling anything."
Pickup transaction prices have risen in large part because of increasing sales of high-end trims, including the F-150 King Ranch, the Ram Laramie and the upcoming Silverado High Country. A 4x4 2013 F-150 Limited has a starting price of more than $54,000.
Ford's Scott said 30 percent of F-150 retail sales and more than half of F-series heavy-duty pickups are so-called high-series versions.
"Our high-series mix has never been better than it's been these last couple of years," Scott said. "If you go down in Texas, it's not uncommon to see a King Ranch on a construction site. It's their office. They're working out of it. They want the refinement, but they need the capability as well."
Luxury cars, SUVs also up
Full-sized pickups were not the only lucrative models to fare extremely well last month.
Sales of compact luxury cars rose 24 percent, and premium luxury cars were up 40 percent. Cadillac, which has one new model in each of those two segments, posted a 40 percent gain, its biggest year-over-year increase since 1976. Porsche sales were up 38 percent.
Large SUVs increased 23 percent, with SUVs posting an average gain of 15 percent overall. Crossovers were up 10 percent, including a 24 percent increase for compact crossovers.
The industry's seasonally adjusted annualized selling rate jumped to 15.3 million, from 14.9 million in April and 13.9 million a year ago.
The only major automaker to report a sales decline for the first five months was Hyundai-Kia Automotive, which doesn't sell any big pickups.
http://www.autonews.com/apps/pbcs.dll/article?AID=/20130610/RETAIL01/306109942/big-pickup-transaction-prices-rise-at-twice-the-industry-rate#axzz2VvtsHI8e
Nick Bunkley
Automotive News
June 10, 2013 - 12:01 am ET
It feels like the good old days for the Detroit Three, with big pickups flying off dealership lots and plants running full out to fill orders for large, profitable models.
"It's a great time to be in the truck business," said Kurt McNeil, vice president of U.S. sales operations at General Motors, which starts shipping redesigned versions of its full-sized pickups to dealers this month.
In many ways, this may be an even better time than before the recession.
Although volumes remain well below the previous peaks, average transaction prices for full-sized pickups have increased at more than double the average rate for the industry since 2005, according to Edmunds.com. And manufacturers are not creating demand artificially with unsustainable discounts.
Edmunds says average transaction prices for large pickups, including heavy-duty models, have risen to almost $40,000, from about $31,000 in 2005. That equates to an 8 percent gain after adjusting for inflation.
And the housing market is just starting to give the auto industry a tailwind that some in the industry say could bring pickup sales back to the levels Detroit enjoyed nearly a decade ago.
Also, the Detroit Three no longer have to spend their truck profits just trying to cover the crushing legacy costs and overhead expenses that helped land two of them in Bankruptcy Court.
"It allows them to do things and make investments that in the past they neglected," Brian Johnson, an analyst with Barclays Capital, said in an interview.
In May, full-sized pickups accounted for about one-third of the 8 percent increase in U.S. sales volume from a year ago. For the first five months of the year, the segment was up 21 percent while the industry rose only 7 percent.
2 million pickups
At that rate -- and most analysts expect the industry's selling rate to rise in the second half -- deliveries of full-sized pickups would reach 2 million units for the first time since 2007, before surging gasoline prices pushed many pickup buyers to seek more efficient alternatives.
"What we're really encouraged about is that the 2010-12 improvement came without the benefit of housing. That was a missing piece of the puzzle," Doug Scott, marketing manager for Ford Motor Co.'s truck group, said in an interview. "Now it looks like that housing element is going to be there.
"That could really drive full-sized pickup sales higher in the future and perhaps put us in a position where we approach those 2004-05 levels. It wasn't that long ago that most people thought that wasn't in the cards."
In May, Ford sold 71,604 F-series models, 31 percent more than a year ago and the most in any month since August 2006. Sales rose 24 percent for GM's full-sized pickups -- the Chevrolet Silverado and GMC Sierra -- and 22 percent for Chrysler Group's Ram. Those four nameplates accounted for one of every eight vehicles sold last month.
Ford, which sold more than 900,000 F-series models in both 2004 and 2005, is on track to sell nearly 800,000 this year. But because the average transaction price for the F series is up more than $10,000 since 2005, this year's sales of that one nameplate would generate almost $5 billion more than back then, or about the same amount after adjusting for inflation.
As much as the Detroit Three have focused on improving their car lineups in recent years, nothing is better for their bottom lines than growth in pickups. The F series accounted for 90 percent of Ford's profits, while the Silverado and Sierra generated two-thirds of GM's earnings in 2012, Morgan Stanley analyst Adam Jonas has said.
Analysts say pickups will continue to outpace overall industry growth as the market climbs to at least 16 million units next year, driven by demand from home building, the energy boom and even a modest resurgence in so-called urban cowboys -- people who don't need a truck for work but still buy one, oftentimes splurging for plush, high-priced versions.
"The truck segment really shows no sign of slowing down," said Alec Gutierrez, senior market analyst for Kelley Blue Book. "A lot of those consumers who sat on the sidelines are now jumping back into the market, even though they don't have a job in construction and they're not hauling anything."
Pickup transaction prices have risen in large part because of increasing sales of high-end trims, including the F-150 King Ranch, the Ram Laramie and the upcoming Silverado High Country. A 4x4 2013 F-150 Limited has a starting price of more than $54,000.
Ford's Scott said 30 percent of F-150 retail sales and more than half of F-series heavy-duty pickups are so-called high-series versions.
"Our high-series mix has never been better than it's been these last couple of years," Scott said. "If you go down in Texas, it's not uncommon to see a King Ranch on a construction site. It's their office. They're working out of it. They want the refinement, but they need the capability as well."
Luxury cars, SUVs also up
Full-sized pickups were not the only lucrative models to fare extremely well last month.
Sales of compact luxury cars rose 24 percent, and premium luxury cars were up 40 percent. Cadillac, which has one new model in each of those two segments, posted a 40 percent gain, its biggest year-over-year increase since 1976. Porsche sales were up 38 percent.
Large SUVs increased 23 percent, with SUVs posting an average gain of 15 percent overall. Crossovers were up 10 percent, including a 24 percent increase for compact crossovers.
The industry's seasonally adjusted annualized selling rate jumped to 15.3 million, from 14.9 million in April and 13.9 million a year ago.
The only major automaker to report a sales decline for the first five months was Hyundai-Kia Automotive, which doesn't sell any big pickups.
http://www.autonews.com/apps/pbcs.dll/article?AID=/20130610/RETAIL01/306109942/big-pickup-transaction-prices-rise-at-twice-the-industry-rate#axzz2VvtsHI8e
06-11-2013, 03:13 PM
#2
10 Second Club
iTrader: (8)
It's insane to pay that much for something that from the cab back is equivalent to a horse drawn buggy.
I'll be riding in my 03 Silvy 2500hd for a long time yet. I give $27500 for it new. And it's loaded up with bucket seats, bose stereo and all the other normal power ****.
I'll be riding in my 03 Silvy 2500hd for a long time yet. I give $27500 for it new. And it's loaded up with bucket seats, bose stereo and all the other normal power ****.
06-24-2013, 07:39 PM
#3
I agree with you HioSSilver..seems like every year truck prices go and nothing changes with them..for example the 07.5-13 gm trucks nothing changed with them except the tranny and i paid like 20k for my 08 and now the 13s in the same configuration are going for 31k..thats just crazy to me
06-27-2013, 02:31 PM
#5
I agree. I have my 03 Silverado SS that is about to turn 70k on it. (Never drive it as I work from home a lot or drive my Formy). Loaded to the tilt. I look at all the leftover 13's and still can't justify the cost for a truck that would have the same or less than I have now. I really think I'm going to keep this one for awhile unless I can find a great deal on a Duramax.
The 14's do look awesome though.
The 14's do look awesome though.
06-27-2013, 02:52 PM
#6
Registered User
Join Date: Jun 2013
Location: Cleveland, OH
Posts: 17
Likes: 0
Received 0 Likes
on
0 Posts
Call me old fashioned, but a pickup is for hauling and a car for racing. I just can't see dropping so much money for a vehicle I'd mostly use to haul stuff around.