Pickup truck sales rebound to pre-pandemic levels
The coronavirus outbreak may have thrown millions onto unemployment rolls and shut down businesses across the nation, but people still need pickup trucks for their jobs. Sales of trucks in the United States have bounced back to pre-pandemic levels.
Ford, Chevrolet, GMC and Ram dominate the U.S. truck market, and pickups have led a broad recovery of autos since the sales trough in late March. After falling by one-fourth the week of March 29, truck sales rebounded quickly. As of May 3 about 489,000 light duty trucks have been sold this year — just 1% off pre-virus forecasts of 505,000.
That boost has helped defy predictions that overall vehicle sales would crater by 80%. According to J.D. Power, overall retail sales have been on the upswing for five straight weeks, with sales off only 38% last week from predicted, pre-virus levels.
But the demand has eaten into truck inventory levels, which are now half their normal levels with production idled across North America. When plants of Detroit automakers begin reopening May 18, automakers say their first priority is to rebuild supplies of those trucks that have been so beneficial to their bottom lines.
“While there is considerable uncertainty around future demand for new vehicles, one certainty is that manufacturers need to replenish heavily depleted stocks of large pickup trucks,” said Thomas King, J.D. Power's president of data and analytics. "Pickup truck production will be a focus for all manufacturers because of their depleted inventories and the major contribution that pickups make to manufacturer revenues and profit.”
To accelerate truck sales, manufacturers have offered 0% percent financing, seven-year loan terms and record incentives — $5,000 per sale on average — to move their best-selling, most-profitable products. With sales approaching normal levels, Ram has been the first to dial back truck incentives.
Park Cities Ford in Dallas reopened its showroom in late April with social-distancing measures in place. Unlike Michigan, Texas dealerships never shut down completely and maintained sales through appointments and online. Truck sales are strong and the dealership is carefully monitoring declining inventories that are down to two months versus the usual three to four months.
"Inventories haven't hit red-alert yet," said Park Cities General Manager Greg Tomlin. "But if plants don't open back up soon it will be a real problem for us. We stock a lot of pickups, but it's also Explorer and Escape inventories that have us concerned."
Truck sales have boosted average transaction prices to a near-record $35,700. And they pushed the market share of Detroit automakers to 43% compared to 37% before the pandemic.
The stampede for pickups has depleted once-healthy inventories. According to J.D.l Power, truck inventory levels normally average 103 days; they are expected to be down to 68 days by the end of this month and remain there for most of the summer.
“I've reviewed the inventory across all of our regions at the end of April. I have not seen inventory levels that low for — well, I can't remember when,” Fiat Chrysler CEO Mike Manley said on a Tuesday earnings call. “When you get down to that level of inventory... you're bound to be running short of certain high-volume truck configurations. But what it does mean is that we bring our plants up with a much higher level of dealer orders than people maybe expect.”
To meet demand, automakers will be prioritizing truck production as their plants come back on line.
“Dealers have done an exceptionally good job of selling from a low inventory base. But I would say that as we open back up here, prioritizing trucks and getting them out remains our priority among other vehicle lines,” General Motors Co. CFO Dhivya Suryadevara said in an earnings call Wednesday. “That’s what we’re going to prioritize.”
Ford's F-series pickups are perennially the best-selling vehicles in America. Four Ford plants, supported by 2,000-plus U.S. suppliers, are devoted to pickup manufacturing that employs 19,000 workers.
"The F-series," said Ford Motor Co. Chief Operating Officer Jim Farley, "will be critical in rebuilding our economy."
Jordyn Grzelewski, Kales Hall, and Breana Noble of The Detroit News contributed.
Henry Payne is auto critic for The Detroit News. Find him at firstname.lastname@example.org or Twitter @HenryEPayne.