My friend Terry Box, the Automotive Writer for the Dallas Morning News, had a feature article this past Sunday on the competitive landscape of the pickup market:
Shiny new F-150 pickups blanket a lot at Five Star Ford in Plano, (A DFW Premier Car Pro Show sponsor) filling every space and some aisles with bumper-to-bumper color. More are on the way.
“I don’t have any space left, so we’re looking at leasing someplace to put the trucks they’re bringing me,” general manager Brian Huth said. “We’ll really be motivated to get rid of them.”
The pickup sales war that many had anticipated last summer may finally be getting some guns on the ground. The primary targets will be General Motors’ 2014 Chevrolet Silverado and GMC Sierra, the first all-new pickups from GM in seven years.
Automakers try to avoid putting incentives on all-new vehicles, hoping to cash in on pent-up demand from consumers eager to buy them. GM’s new trucks stumbled in September, and many expect the company to start ratcheting up its sales incentives.
Moreover, December is often the best month of the year for truck sales.
“In this market, I think, buyers are looking for a reason to buy a new truck, and deals can get them in the door,” said Jerry Reynolds, a former Ford dealer and host of the Car Pro Show on WBAP-AM (820) and KRLD-AM (1080) and in 21 other markets nationwide.
Ford is loading up in anticipation. The company’s F-series pickups have been the best-selling vehicles in the U.S. for decades, and Ford doesn’t want to cede any market share to the new Chevy truck, the second-best-selling vehicle in the U.S.
Through mid-November, Ford’s factories had cranked out 575,181 F-150s — up 9.5 percent from the same period a year ago, according to Automotive News.
The Detroit Three dominate the full-size pickup segment, accounting for 93 percent of sales. When General Motors’ 2014 pickups began rolling into dealerships last summer, Ford and Ram responded with big incentives on their older vehicles. Those skirmishes were relatively brief.
GM put its incentives on “old” 2013 models of the Chevy Silverado and GMC Sierra pickups, offering cash back of $3,500 to $4,500. Once they mostly sold out, clearing dealer lots for new pickups, GM opted to place only modest incentives on the 2014 trucks.
Through late November, for example, GM was still offering $1,000 cash back on the new Silverado and Sierra. Ford, meanwhile, offered up to $2,250 cash back on 2013 F-150s, and Ram posted an incentive of as much as $3,500 on some models of 2014 pickups, according to Automotive News.
Ford’s share of the full-size truck segment has grown about 0.4 percent this year to more than 38 percent. Ram is up 0.6 percent to 18.7 percent, and the Silverado has remained flat.
In early October, after an 8 percent drop in truck sales in September, GM increased the prices on its new trucks by about $1,500 — probably to pay for future incentives, dealers say.
“It was a strange deal,” said Tom Durant, who owns Classic Chevrolet in Grapevine, the top-selling Chevy dealership in the U.S (also a Car Pro Show Dealer). “You’ve got to compete with the others, and I think we’ll see more now on incentives.”
GM won’t comment on future incentives and declined to offer any explanation for the price increase, saying only that prices get adjusted periodically.
Once the 2013 model trucks at Classic were gone, sales of the 2014s began to rise, Durant said.
“We sold 132 [new Silverados] last month, compared with about 75 in previous months,” Durant said. Bigger incentives could boost them even more, he said.
GM’s new trucks need to recover lost ground, said Jesse Toprak, an analyst at TrueCar.com. “Buyers in the market right now are small business owners who are looking to replace work trucks that are eight or 10 years old, and are extremely price-sensitive,” Toprak said.
With the high margins on most pickups — the most profitable vehicles in the auto industry — GM can probably afford bigger incentives, he said. “There’s a good $5,000-plus built into the price of a new pickup, and even if you give some of that back, dealers and the factory can make money,” Toprak said.
Earlier this fall, when Ford had special incentives on its trucks, some dealers sold F-150s to customers who were originally shopping for a Chevy, Reynolds said.
“The price gap between the F-150 and the new Silverado was huge — like $8,000,” he said.
Still, Toprak expects GM to reassess its incentives and build more moderately priced pickups. Many of the new Silverados and Sierras that initially arrived at dealerships were loaded, high-end models.
“I think it’s all good in the truck market,” he said. “As soon as the inventory pains are resolved with Chevrolet, there’s plenty of demand to go around.”