By on October 6, 2011

When we reported sales on Monday our conclusion was that “big is big again,” as full-sized pickups dominated growth in a surprisingly up month. So, how do you sell a ton of trucks in a month where gas was still hovering around the $3.50/gal mark? Easy: just throw some cash on the hood. Edmunds Autoobserver reports

From a low that generally occurred around April, Ford Motor Co., General Motors Co. and the Chrysler Group LLC have markedly hiked incentive spending on full-size pickups. In April, the average TCI for the full-size pickup category – which also includes the almost statistically insignificant Toyota Tundra, Nissan Titan and Honda Ridgeline – was $3,261 per vehicle. At the end of September, the average incentive for full-size pickups ballooned by more than 30 percent to $4,281 per vehicle.

Executives from the Detroit automakers insist that this was not simply an inventory-clearing move (because, by industry standards, having three times your monthly sales on the lot is “acceptable”), but manufacturers have been trimming truck production all year and with Days To Turn rising, clearing off the lots makes sense. Especially going into the traditionally slow truck sales months of October and November. Hit the jump for more September incentive and transaction price data…

Edmunds gives the overall incentive crown to GM, but the biggest gains came from Honda which boosted spending from the previous month and year-over-year.

But if you express incentives as a percentage of transaction price, as TrueCar does, Chrysler is actually the bigger loser for September… which helps explain why it had one of the biggest volume jumps of the month.

 

 

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10 Comments on “Edmunds Solves The Mystery Of The Full-Size Pickup Sales Boom...”


  • avatar
    KixStart

    I like that top graph, it explains things nicely.

    Can we get a similar graph with days of inventory instead of DTT?

    • 0 avatar
      KixStart

      Or, if you have the numbers handy, publish the inventory levels for the last few months, I’ll get out my crayons and do my own graph.

      • 0 avatar
        mike978

        I know some had expressed concern a few months ago about GM having around 120 days of inventory for their pickups which was out of whack with the norms. Seems like it is now around 90 days so the production cuts and modest increase in incentives seems to have reduced it to normal. I am surprised Ford felt the need to incentivize as much since their inventory position was normal.

  • avatar
    Educator(of teachers)Dan

    The local Ford dealer is advertising up to $4500 cash on the hood. I was shocked to hear that knowing what a best seller that vehicle has been historically.

    • 0 avatar
      NulloModo

      That’s a pretty typical incentive level for the F-150 towards the end of the model year. Truck incentives are always higher than car incentives for a variety of reasons (a lot of it having to do with allowing room for upfit options for business/commercial buyers and still presenting banks with acceptable LTV numbers), but they are priced with that in mind.

      With the Ford lineup (and from what I’ve seen comparison shopping it appears to apply to GM and Chrysler too) the amount of cash on the hood can differ greatly depending on trim level, purchase type, and other factors. For a F-150 Lariat the total rebate is only $2,000 without taking advantage of trade-bonus cash or Ford Credit finance rebates that require financing through FMCC. If you go to the other extreme, you can save over $7,000 from MSRP by combining the right package discounts, FMCC rebates, trade in cash, and extra money on certain engine/trim combos on a XLT.

  • avatar
    FleetofWheel

    Though it appears lowering the price of trucks led to greater sales, the self-deluded car marketing reps can tell themselves that no prices were actually lowered.

    So they got their asking price and it was only by the cruel logic of arithmetic did their net proceeds go down because of that “cash on the hood”.

  • avatar
    APaGttH

    So based on Incentives/ATP GM and Toyota are hand-in-hand. I never, ever thought I would see that day. Oh, and Hyundai/Kia is in the incentive basement with Ford?!?! The world has gone nuts!

    =========================================================

    I’ve becoming increasingly confused on what is “healthy” inventory levels. I’ve understood it to be that for non-niche vehicles that 60 to 75 days was ideal, under 45 days is tight, under 20 days is flying off the lots, and over 90 days is bloated. Is that still correct?

    I read lots of different arguments post-tsunami on what is a “healthy” level and seeing lots of arguments from some analysts and the B&B that 90 days is the new “healthy,” which doesn’t seem right to me. I seem to remember post-economic meltdown that “healthy” was closer to 45 days, and Honda/Toyota were the queen and king respectively at inventory management at those levels.

    Input from the TTAC gods appreciated.

  • avatar
    gslippy

    I’m not understanding the mix of apples and oranges here, and I’m not sure the data supports the conclusion.

    According to the 2nd chart, incentives have actually dropped for C, F, GM, and N since last year. The only increases were between Aug and Sept of this year.

    The 3rd chart shows all incentives – not just for trucks – so I’m not sure what bearing it has on the truck market.

    Seems like this may just be a case of a rising tide lifting all boats.

  • avatar
    Loser

    “So, how do you sell a ton of trucks in a month where gas was still hovering around the $3.50/gal mark? Easy: just throw some cash on the hood”

    IMHO the biggest reason is that people have adjusted to or are now used to the price of gas. When gas first hit $3 a few years ago you would have thought it was the end of the world.

  • avatar
    DenverMike

    Clean older trucks get exported out of the US and get replaced by new. That doesn’t happen with cars so much because they’re common to the world and full-size trucks are unique to North & South Americas. Mexico is a huge ‘drain’ for 10-25 year old well equipped US trucks as theirs are usually beat to death base trucks. Only 10 year old cars can be imported into Mexico and that’s a pretty narrow window compared to trucks. Notice the resale value of clean 20 year old trucks compared to say Camrys or Taurus’.


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