Minor Miracle: Truck Sales Are Up
With some analysts now estimating the coronavirus outbreak’s cost to the automotive industry at as much as $100 billion, there’s not much reason to hope for any vehicle segment to trend in any direction but downward. However, domestic pickup sales have surprised us.
Despite the industry taking it on the chin overall, domestic truck sales are actually improving in the United States — at least by the measure with which we gauge domestic sales performance. Seeing the writing on the wall last month, domestic nameplates began incentivizing product like wild. Apparently, bargains ride two-up with the lead horseman of Pestilence. That, in combination with southern states being slower to enact social distancing measures, helped prop up truck sales. While that may result in the region having a longer recovery, it seems to have padded the market’s fall ever so slightly.
Automotive News quoted Cox Automotive as saying March’s incentive offers were uncharacteristically intense. Discounts typically appear at the start of a month and wrap by the end for more accurate assessment of their effectiveness (though that’s happening more internally as automakers abandon public monthly reports). But most of the factory incentives last month commenced in the middle of March as manufacturers finally realized COVID-19 was set to obliterate both output and sales.
Brad Korner, general manager of Cox’s rates and incentives program, said many of last month’s offers will remain active for at least another few weeks, as automakers were still evaluating how consumers responded to them. However, Asian manufacturers that still report every month aren’t offering much promise. Cox said they all endured sales declines of between 31 and 48 percent though March.
Pickup volumes only appear to be riding a temporary wave aided by impressively low fuel prices, the swap to quarterly reporting, regional delays in social distancing measures and appetizing deals with financing options stretching all the way out to 84 months. In the last days of March, domestic brands had incentive spending averaging around $7,200 per car.
From Automotive News:
As sales dried up at dealerships around much of the country starting in mid-March, there was far less disruption in states such as Texas, Florida and Georgia, where governors were slower to put restrictions on residents and businesses. March pickup sales were exactly in line with J.D. Power’s pre-coronavirus forecast in the Southeast and off just 1 percent in the South Central region. Meanwhile, sales in the Northeast plummeted 29 percent below expectations.
“As some states put strict social distancing orders in place, others were business as usual, and for us, that meant truck sales continued,” a GM spokeswoman said.
The coming months could prove more challenging for all vehicle segments, including pickups, as more states restrict commercial activity and tell residents to cancel all nonessential travel. Markets where stay-at-home restrictions are in place “typically show an 80 percent reduction in sales from the baseline forecast shortly after orders are enacted,” J.D. Power said.
Ford’s F-Series still ended up as America’s biggest overall seller, though it lost 13.1 percent in the first quarter vs the previous year. By comparison, Chevrolet’s Silverado surged by 26.6 percent in Q1 while the GMC Sierra improved by 30.7 percent. Ram’s combined truck sales (which includes the Ram Classic) also rose 7 percent. Barring a miracle where COVID-19 suddenly dissipates, no one expects Q2 to be quite so healthy. While incentives will probably remain in place, the sudden surge in unemployment and continued social distancing efforts are expected to tamp down volumes dramatically through April.
[Image: General Motors]
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