Death Defying Pickups Headed for A Dirt Nap?

Robert Farago
by Robert Farago

Looking back over last month's US sales stats (Frank Williams is readying his BTN analysis), it's easy to see that healthy sales of full-size pickup trucks have helped stave-off a radical downturn in The Big 2.8's fortunes. The Wall Street Journal reports the trend may be only a temporary reprieve from a generally declining automotive market, with a major reckoning dead ahead. Industry experts from within and without suggest that increased competition (i.e. an industry average of $4k in sales incentives per truck) has created an artificial and unsustainable market. "We're all watering down this truck market," Ford sales-analysis manager George Pipas told the Journal. "There's only so many buyers here, and we're not going to get more buyers from Mars." Pipas predicts a "rough fourth quarter" and says all the discounts, incentives and special financing lavished on pickups will end in tears. "Payback is inevitable." Given The Big 2.8's ongoing reliance on pickups for profits, Pipas might have also observed that payback is a bitch.

Robert Farago
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  • Johnson Johnson on Oct 08, 2007
    Sajeev Mehta, Yes there is $3000 on the hood, but that's compared to the over $4000 that you could have had off of a Tundra in July and earlier months. Dodge offers a lot more than that in terms of discounts, GM offers about the same, and Ford offers a bit more. And sorry but local discounts ARE NOT representative of what the whole company is doing. Company-wide, or nationwide Toyota has reduced incentives. Some dealers locally may be offering huge discounts, but those are not nationwide discounts. Toyota had a huge boost in net profit for Q2 of this year. Believe me, they are not losing money on the Tundra. And for 2008, because Tundra prices have been lowered, that means even less incentives will be used than now.
  • Argentla Argentla on Oct 08, 2007

    Toyota's strategy with the Tundra reminds me of the price wars between Chevy and Ford in '55 and '56. They priced so aggressively that they deliberately sacrificed profit margins. Their apparent goal: hammering the independents, who couldn't afford to keep up. If Nash and Hudson hadn't merged to form AMC, they would have died, and it was a real nail in the coffin for Studebaker.

  • Sajeev Mehta Sajeev Mehta on Oct 08, 2007
    Yes there is $3000 on the hood, but that’s compared to the over $4000 that you could have had off of a Tundra in July and earlier months. Dodge offers a lot more than that in terms of discounts, GM offers about the same, and Ford offers a bit more. I guess that's just a difference of opinion: $3000 on all models is far from my definition of low incentives. But you're probably right, I imagine Toyota is still making $$$ on each unit. But, since you mentioned it, all four truckmakers are adding insane incentives, making it unprofitable for everyone. Price wars get ugly for almost everyone involved...because they are the feisty upstart, maybe the Tundra will be the only one who emerges unscathed.
  • Jthorner Jthorner on Oct 09, 2007

    Nobody in their right minds would want to fight a marketing war of attrition with Toyota. Strategically Toyota is in an excellent position. They have a strong brand and a highly profitable non-pickup-truck lineup. They can afford to sell trucks at near cost levels to build share should they choose to do so. Ford, GM and Chrysler are lucky that Toyota isn't managed like a small airling with cutthroat pricing as the #1 sales tool. Truck sales are rapidly trending back to their historic ~25% market share, which means a contraction of half from their peak market share. Nothing is going to change that now. Several posters have mentioned that somebody should be selling a good, cheap, small, better-fuel-economy truck like the Hilux, Luv, etc. of old, but so far there are none in the No. American market.