F150 Crash Slices $800m – $1b (or More) From FoMoCo Profit
Automotive News [AN, sub] continues the Black Tuesday mop-up; this time they pickup on pickup profits. Or lack thereof. "The segment is expected to shrink by about 500,000 units this year to as low as 1.65 million. That's a far cry from the 2.5 million in the peak years of 2004 and 2005." Buried at the end of an article suggesting that now might not be the best time to be launching a new Ford F150 or Dodge Ram (if not now, when), AN reveal that F150 annual sales are tumbling from last year's 690,589 to, by Ford's admission, "well below 600,000 this year." Rounding that out to a 100k hit, at $8k – $10k profit per vehicle, that's $800m to $1b the cratering market's excising from FoMoCo's annual pretax profits. (That's profit folks, not turnover.) Using those same numbers, Ford's "horrendous" 142-day supply (226k) of F150s equates to $1.808,000 to 2.26b to worth of profit locked-up on the lots. AN doesn't run the numbers for GM and can't do the math for Chrysler (it's now mostly owned by private equity). Instead, they offer this helpful tidbit. "Chrysler remains hopeful for a turnaround. 'Whenever gasoline prices spike, there's a free fall in the truck segment,' said Mike Accavitti, director of the Dodge brand. 'But the market is still sizable.'
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Do they really make $8k profit per pickup truck? Or is it gross margin, without counting the cost of factories?
The nice thing about the Ridgeline (if you're Honda) is that you could kill it, and it wouldn't make an appreciable difference. It was a low-risk gamble for Honda. All the Ridgeline had to do was keep truck-intending Honda buyers in Honda's showroom, which isn't exactly hard to do. I do think it's a silly truck, but if you think about it as an Odyssey with one less row of seats and an open trunk, it's not so offensive. In fact, if Honda _actually_ made an Odyssey in such a configuration, it might've sold better. I say bring back the El Camino and it's brethren. If European contractors can get the job done with Piaggio Ape, surely North Americans could manage the same in a ass-less Toyota Matrix.
The Ridgeline was low-risk for Honda, but has been a disappointment by most measures. Honda's sales goals were met only after discounting the model fairly significantly. Owner satisfaction has been low for a Honda, and has certainly never been as high as, say, the Civic or Accord. Honda probably didn't win many loyalty points with it. To add insult to injury, when I picked up my Elantra from the rental lot last week, it was parked across from a couple Ridgelines on the rental lot. Also nearby were two Pilots and three Odysseys. I have NEVER seen that many Hondas on a rental lot.