SUV and Pickup Truck Buyers Now "Owners for Life"

Robert Farago
by Robert Farago
suv and pickup truck buyers now owners for life

A dealer reports: "Ford just re-released 'Employee Pricing' on their Ford Trucks (plus up to $3500 cash back). GM just released up to $4000 additional owner loyalty bonus cash on their trucks and SUVs (in addition to the up to $2000 already on the hood). Normally, these incentives give the dealer enough cash to throw at trade-ins to at least make a deal possible. Not profitable. And not painless for the customer. Merely do-able. Well, it ain't enough. In our meetings with manufacturer marketing teams and dealer advisory committees (where the smell of fear is palpable), the stories from the field are apocalyptic. One salesman stood up. 'I had a customer with a two-year-old Expedition. Crazily-enough, he wanted a new F-150. I tried everything, every trick in the book, and I couldn't put a deal together. And he was my BROTHER!' (Read: I was taking a loss, he was taking a loss, and the numbers were cutting us both so bad we couldn't deal). Another meeting, another dealer. 'I brought a year-old GMC Denali to auction. Priced it at rough wholesale book, minus seven grand. I was prepared to accept any offer up to 10 grand behind rough wholesale book. I was taking to take a tremendous beating to unload it. And it didn't sell. Didn't get an offer of any kind.' (Read: You can't give 'em away. Wait; you cannot PAY people to take them.) Now that the wealthy (who can afford the beating) and the quick-movers (who have already glutted the market) are in their Civics, Camrys and Accords; consumers in full-size trucks and SUVs are pretty much owners-for-life. And dealers, who must move new metal, can't do anything to help them. Not even if it's their brother."

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  • Phil Ressler Phil Ressler on Jun 13, 2008

    I suppose we can't hold TTAC accountable for having no institutional memory of the 20th century, but are we really at a loss for community memory of events 29 to 35 years ago? Everything expressed in Robert's commentary has precedent in market behavior witnessed in the wake of the fuel shocks of 1973 and 1979. Move along, folks. There's nothing to see here. Phil

  • Sherman Lin Sherman Lin on Jun 13, 2008

    The difference is that people were not as much in debt and leases were not as popular. I remember both the fuel crunch as well as the high inflation that followed. Its why I buy and generally keep my vehicles for 10 years anyway. Its why I save and am not an impulse buyer of consumer items. Its why I invest my diposable income in appreciating assets (rental houses) that are income producing. Its why my house and car are paid off, its why I don't carry a balance on my ccredit card. Unfortunately the institutional memory of the general car buying public as well as the upper management of the detroit 3 that is is deficient here. I think TTAC and Robert are merely pointing out the lack of memory of the public ass well as the Detroit 3.

  • Landcrusher Landcrusher on Jun 13, 2008

    Sherman, What I find amazing is that the no debt secret to financial success is no secret at all, but so few get it. People are all so sure that the wealthy are in on some big secret, when most of the actual wealthy have regular incomes and are willing to tell everyone how they did it for free.

  • Serpico Serpico on Jun 16, 2008

    I'll take one, call me. Just take my car as a trade!