By on July 4, 2008

nissan.jpgTruck-heavy Detroit is in a world of hurt. Buyers have abandoned their former cash cow; light truck sales dropped 28.4 percent last month. July's numbers will be worse. August's worserer. And speaking of what's-blacker-than-black, even the remaining formerly bounteous bovines are looking distinctly Mary-Kate and Ashley. The Detroit Free Press takes a break from their barbecue to bring news that the genre's profits have dropped by half. Or more. "Many of the nation's automakers [read: all of the nation's automakers] have been jacking up the deals into territories not seen since the summer 'employee pricing' craze of 2005. Last month, automakers offered an average of $6,580 off pickups and $5,850 off midsize SUVs, according to Autodata Corp. of Woodcliff Lake, N.J., a private firm that estimates incentive spending. Automakers do not report that number publicly." Why would they? Six-plus-grand is the average. Of course, there will be a reckoning. Brian Johnson, an analyst with Lehman Brothers: "We believe that GM and the industry will see a large payback in the coming months." Ya think?

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12 Comments on “Pickup Truck Profits Disappear Along with Sales...”


  • avatar

    PS Anyone who think the U.S. pickup truck market will revive anytime soon would do well to read this story.

  • avatar
    romanjetfighter

    One of the biggest dealers in SoCal, Elmore Toyota, has Tundras 10k off sticker, including the 5.5k rebate. Shame with gas being 4.50 for regular, 10k is about 2 weeks worth of fuel for that fatty. They should’ve stuck a 6-speed with the smaller engines and not just the big 5.7L. Silly Toyota.

  • avatar

    Link in my comment fixed. Thanks for the heads-up guys.

  • avatar
    mel23

    I’m reading “New Monetarism” by Roche & McKee. If these guys know what they’re talking about, and I think they do, we’re in for it.

    We’ve come to the end of the easy money time. Don’t remember how many times I’ve read that all this low-interest money was due to ‘excessive’ saving by such as the Chinese and Japanese. The authors illustrate via an upside-down pyramid depicting the composition of total global liquidity.

    Power money (money from central banks) is 8% of world GDP.

    Broad money (what banks loan) is 115% of world GDP.

    Securitised debt (e.g. bank loans sold in bonds) is 129% of world GDP.

    Derivatives (contracts) is 1012% of world GDP.

    From 1990 to 2006 power money went from $.3T(rillion) to $.8T, broad money went from $3.9T to $9.4T, securitised debt went from $13.7T to $40.7T and deriviates from $17T to $102T.

    Derivative money is used for things like buying futures; oil for example, but there is spillover from one class of liquidity to another so no telling what’s going to happen.

  • avatar
    obbop

    As a life-long member of the working poor (you know, the Americans that actually have to compete with the millions of illegals for jobs, housing, etc.) I was finally able, after 3 decades of work, buy my first new vehicle in 2004.

    Having had to live in a 1975 Honda Civic in the 1980s (that was tough)and foreseeing what was coming economically in 2004 I bought a full-size long bed pick-up and put a shell/topper upon it.

    It’s a mansion compared to the Honda!!!

    Since it’s just pudgy old me I can live on that truck if the hard times hit me.

    I wonder how many others will wish they had thought ahead as I did?

    The next big market may be vehicles folks can live in. I feel sorry for family units.

    Grapes of Wrath the Sequal?

    Thought for a very brief period about selling gor a high mpg vehicle but tossed that aside.

    If the worst comes I will have a place to sleep that’s dry and out of the wind. A sleeping bag will keep me from freezing.

    Maybe I’ll see you folks sleeping in your vehicles. Here’s a tip. Remove the passenger upright part of the seat. If possible, remove the back seat upright so your legs can enter the trunk. Cut a piece of 3/4-inch plyeood to fit. Use shims to level the platform. Dense foam rubber for the mattress. Concoct curtains however you can.

    The Civic was a hatchback and the back seat upright folded down. Only had to remove the passenger seat backrest. Allowed laying flat stretched out…. that’s crucial.

    Welcome to the working-poor class, folks. If you’re not there now I may be seeing you soon.

  • avatar
    eggsalad

    Fie on profits. The day I can walk into a Ford dealer and get a strippo F-150 for a legit $9999, I’m buying one.

  • avatar
    seabrjim

    Obbop, I know youre not kidding. People have no idea whats around the corner because they only care about the here and know. They enjoy being lied to by the 6 o’clock news, cnn, msnbc Cavuto etc. “everythings gonna be ok, its just cyclical!” Sorry but the plunge protection team cant cover much longer. Dont buy that pick up just yet, its gonna be even cheaper. Mel23, you might want to read Robert Chapmans web site, “the international forecaster”. That, my friend will scare you as to how leveraged we are as a country. It is mathematically impossible, even if everyone had an extra $100,000 or so to pay off the debt or even the interest on it.

  • avatar
    windswords

    mel23:

    “Broad money (what banks loan) is 115% of world GDP.”

    You can only have a maximum of 100% of anything. Could you explain what measurement you really meant?

  • avatar
    mel23

    windswords:

    The total amount of broad money is greater than GDP. I can have a mortgage that is 115% of my income.

  • avatar
    windswords

    mel23:

    OK So you mean that Derivatives (contracts) are almost 10 times greater than the world GDP. I get it. Thanks.

  • avatar
    Landcrusher

    The economy isn’t in bad shape at all. You will know when the economy is in bad shape because the press will start printing good news. In a truly bad economy, no one will buy a paper to read about the bad economy.

    Of course pick-up sales are down. The construction industry is in the toilet. Gee, that has never happened before. Obbop has the right idea. You prepare for the worst, and then you don’t have to worry about it. All this worrying and whining is going to get our so called leaders in the mood to REALLY screw things up. Then we will all wish we had it so good, like back in ’08.

  • avatar
    bluecon

    The way the economy is headed 2008 is going to be the good old days pretty soon.

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