Ford Motor Co.

Pickup demand keeps driving light vehicle sales

June 4, 2013

Demand for pickup trucks continues to bolster light vehicle sales in the U.S., according to automakers, though there is a growing feeling in some quarters that sales rates may be reaching a “plateau” of sorts -- though that's not slowing down vehicle production plans in North America as of yet.

Ford Motor Co. said its U.S. sales were up 14% overall in May compared to the same month in 2012, with sales of cars up 9%, sport utility vehicles (SUVs) and crossovers up 15% and trucks up a whopping 18%.

“F-Series sales – fueled by construction growth and pent-up demand – reached their highest level in more than six years,” said Ken Czubay, Ford’s VP-U.S. marketing, sales and service, noting that the OEM sold 71,604 F-Series trucks in May; a 31% increase versus the same month last year and the 22nd straight month for sales to increase.   

As a result of demand, Ford is boosting its third-quarter North American production targets this year to 740,000 vehicles, up 10% from the 673,000 vehicles produced in the third quarter last year. That includes 40,000 vehicles added from a reduced July summer shutdown and the addition of 200,000 units of annualized straight-time capacity starting in the fall of this year. The OEM did stress, however, that its second quarter production target of 800,000 vehicles remains unchanged.

Chrysler Group LLC said its U.S. light vehicle sales also continued to gain strength as the OEM sold 166,596 total units  in May – an 11% increase compared to the same month in 2012 and it’s best sales volume for May since 2007.

"Our best May sales in six years enabled us to extend our sales streak to 38-consecutive months of year-over-year sales gains," said Reid Bigland, head of U.S. Sales for Chrysler. "We continue to see strong retail sales throughout our product lineup as eight Chrysler Group vehicles set sales records in May.”

The OEM’s Ram Truck division witnessed a 24% jump in sales this May, with Ram’s pickup truck sales setting a sales record for the month of May with a 22% gain – the Ram pickup truck's 37th-consecutive month of year-over-year sales gains, Bigland noted. The Ram Cargo Van set a sales record for the month of May, the vehicle's best sales month so far this year, he added.

General Motors sold a total of 252,894 light vehicles in the U.S. this May, up 3% compared with the same month in 2012, with GM’s trucks sales up 15% versus May a year ago, including a 23% increase for large pickups and a 30% increase for large SUVs.

By contrast, crossover sales were up just 3%, with compact crossover sales up 10%. Retail passenger car sales were up 2% while total sales were down 6%, the OEM said.

Still, Kurt McNeil, GM’s VP-U.S. sales operations, noted that the “pickup rebound” remains in “full swing” and that the OEM continues to see strong retail demand for crossovers. “These are all powerful signs that the gradual recovery in the economy is becoming more broad-based. That’s great news for the auto industry,” he said.

Toyota Motor Sales (TMS) U.S.A. said its total May sales this year -- including Toyota, Scion, and Lexus brand vehicles -- were up 2.5% to 207,952 units versus the same month in 2012. The Toyota Division alone posted a 2.3% jump in sales this May to 185,723 units versus the same month last year, with demand steady for the OEM’s compact Tacoma pickup and full-sized Tundra model.

Tacoma sales topped 14,727 units this May, up 20% compared to May in 2012, while Tundra recorded sales of 9,950 units this May, up 13.5% compared to the same month last year.

“New vehicle sales are heating up along with the weather, and solid May results coupled with an excellent Memorial Day weekend provide great momentum as we move into the summer selling season,” said Bill Fay, Toyota Division group VP and GM. “The five-year high in consumer confidence translated into especially strong retail sales.”

J.D. Power & Associates added that strong demand for full-size pickups is also helping to keep industry average transaction prices at record levels.

The average transaction price for all new vehicles for May reached $28,921, the highest ever for the month of May and 3% higher than May 2012, noted John Humphrey, senior VP for J.D. Power’s global automotive practice.

Several components are contributing to strong industry transaction price performance, he said, including: low interest rates, which help keep monthly payments low; the use of extended-term vehicle loans – 72 months or longer – which also help reduce monthly payments;  strong used vehicle values, which equate to more trade-in equity; and strong new-vehicle residual values, which lower new-vehicle lease payments. 

"Collectively, these components mean that while industry new-vehicle transaction prices have risen by 19% during the past six years ($28,921 in May 2013 from $24,404 in May 2008), the average monthly payment for new-car buyers and lessees has increased only 3% ($455 in May 2013 vs. $443 in May 2008)," Humphrey stressed. "This market dynamic is enabling consumers to purchase new vehicles with improved fuel economy, safety and technology at an affordable monthly payment."

Yet despite May’s robust numbers, there’s growing concern that auto sales may be reaching a plateau of sorts in the U.S. market according to some.

“As summer continues, the degree of fuel cost increases will determine whether light truck sales are sustainable in the face of higher fuel prices, given the stability of the economy, or whether consumer preference will shift along with fuel prices regardless of the economic conditions,” noted Matthew Scruggs, an automotive and transportation consultant with Frost & Sullivan.

"This is the time of year when the automotive industry holds its collective breath as the recent past has dealt with a spring slowdown in demand; however, the current pace suggests full steam ahead for the second half of 2013," noted Jeff Schuster, senior VP- forecasting at LMC Automotive. "[Yet] economic and market headwinds have been minimized, while demand continues to build momentum."

As a result, LMC is holding the total light-vehicle sales outlook for 2013 at 15.4 million units, while keeping its 2013 outlook for retail light-vehicle sales at 12.5 million units.

North American light-vehicle production year to date through mid-May is up 4% compared with the same period in 2012, LMC said, with most major manufacturer volumes are either flat or up slightly, with the exception of GM, which is down 4% on the transition of the Impala and weaker large SUV sales ahead of the new models for 2014. 

LMC is increasing its forecast for 2013 North American production to 16 million from 15.9 million units, marking the first time production in the region has reached the 16 million-unit level since 2002, according to the firm.

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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