Death Defying Pickups Headed for A Dirt Nap?
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.
More by Robert Farago
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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.
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.