Over the past few years, I've heard a common and growing complaint from fleets using substantial numbers of pickups and SUVs: Their trucks cost too much — and it's starting to hurt the bottom line.
I talked to one municipal fleet manager recently who buys a lot of four-wheel drive SUVs. “I can't get a simple four-wheel drive light truck for under $21,000 anymore,” he told me. “I am talking about a basic, stripped-down work truck, not a consumer model.”
The consumer market, of course, is the reason why light truck prices have escalated. Demand for light trucks has been extremely high, and manufacturers have been cashing in. It costs them substantially less to build light trucks than cars. In fact, they can earn as much as $17,000 in profit on some of the high-end pickups and SUVs.
Warren Brown, a staff writer for The Washington Post, observed how consumer demand has altered the perception — and cost — of light trucks.
“What has happened to small-truck pricing reflects what is happening to the truck market in general,” he said in a recent column. “Trucks, including pickups, are not just trucks anymore. They have moved from the working class to the affluent class, where buyers want them to have all the performance and goodies found in sports cars and luxury sedans.”
Brown recently road tested Toyota's 2002 Tacoma Pre-Runner V6 light pickup — sans four wheel drive — and was taken aback by the base sticker price of $18,340. “How could anyone now demand $18,000 … as the base price for something as simple as a compost-hauling truck?” he wondered. Yet Brown found that's the going rate among light trucks now, with the 2002 Chevrolet S10 priced at $17,355, Ford's 2002 V6 Ranger SuperCab at $17,355, and Nissan's Frontier V6 King Cab at $21,939 — none of which includes four-wheel drive.
Those are just the low-end, small pickups mind you. The average light truck price today, factoring in all the SUVs and V8 pickup models out there, is over $24,000 — and it keeps rising. For 2001 light truck models, Ford boosted its prices by an average of $146, GM kicked Chevrolet's price up by $118, and DaimlerChrysler increased prices on its Dodge brand trucks by $321. In fact, GM made air conditioning a standard feature on many of its light truck base models, which added over $1,000 to the sticker price.
The trend also doesn't seem to be slowing down. Despite the economic aftershocks of Sept. 11, sales of Class 1 and 2 light trucks continued to increase, in large part due to 0% financing deals and deep discounts aimed at the consumer market. According to Ward's AutoInfoBank, Class 1 light truck sales rose 2.1% to top 6.09 million units in 2001, with Class 2 truck sales rising 3.6% in 2001 to over 2.5 million units.
One of the bigger issues confronting fleets that use light trucks, however, is that their energy efficiency is not improving. Corporate average fuel economy (CAFE) has been held to different standards for cars and trucks, which is one reason it costs less to build a truck. Right now, the CAFE for cars is 27.5 mpg, while that for light trucks — including pickups, minivans and SUVs — is 20.7 mpg. That makes light trucks very sensitive to hikes in fuel prices, which can have quite an impact on the operating costs of fleets that rely on these vehicles.
Unfortunately, attempts to raise the CAFE for light trucks have been stalled repeatedly in Congress. It seems, then, that sticker shock for light trucks, in terms of price and operating efficiency, may be here to stay.