By on April 6, 2020

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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9 Comments on “Minor Miracle: Truck Sales Are Up...”

  • avatar

    Not much point in making the sale if they buyer can’t make the payments tho, is there?

    • 0 avatar
      SCE to AUX

      Missed payments become the bank’s problem, not the dealer or the mfr (unless the mfr is also the bank). The vehicle can just be repossessed and resold.

      But to re-word your statement, there is no point in buying if you can’t make the payments. Unfortunately, many *past* sales are in jeopardy now because buyers can’t pay for a vehicle they bought in 2014-2020. Imagine defaulting on an 84-month loan at payment 72 or something – ouch.

      • 0 avatar

        You make an important point. Lots of people will be defaulting on their auto loans. However I don’t think we will see massive repossessions. The smart banks will offer deferment/forbearance at the drop of the words COVID layoff.

        #1. They know many of those people will eventually get unemployment and/or stimulus checks.

        #2 They know many of the people will return to work at some point.

        #3 They know they are frequently locking in a loss once they repo the vehicle.

        #4 They know that the value of the repo’ed vehicles will plummet if the market is flooded particularly when dealers can’t sell the inventory they have right now.

        #5 They’ll still be racking up interest due that is most likely more than they could get on a loan originated now.

        #6 They know the volume would overwhelm the repo system and it will take a while to get many of the cars, causing a further potential decrease in value. The guy that knows he car is up for repo isn’t going to worry about keeping it in good condition and may even intentionally damage it.

        #7 They get to kick many of the losses down the road, when it becomes much easier to get Wall St to accept “lingering issues due to COVID-19” that are “almost fully behind us”.

        So that 84 month loan just became a 87 month loan that you can expect a reasonable percentage of people to make good on.

  • avatar

    Pickup trucks are the toilet paper of the industry.

  • avatar

    GM’s sales did not surge. They were so awful a year ago that things only returned to normal for the third rate Chevrolet and professional grade Chevrolet offerings. With Ford and Ram having significant comps to go against from 2019, their performance was still very good. Chevrolet just is managing to climb out of the hole they dug with these putrid products.

    • 0 avatar

      Agreed, GM’s numbers only look good because they were so bad last year. Still it is good for them, and a little surprising to me, that they have managed to claw their way back out of the hole.

      So maybe a lot of those earlier losses were due to production change over and ramp up, just like GM was saying.

      The big, as yet unanswered question, is what happens to Ram’s numbers and share once they finally work up the courage to drop the last generation trucks.

  • avatar

    Scout, take a look at the Jeep Wrangler sales when they did the same thing. They fell off a cliff.

  • avatar
    CKNSLS Sierra SLT

    So-as a detractor of the redesign of the 2019 Silverado half-ton-(the reason I bought a 2018) the sales slipped after the redesign. Now-apparently the potential buyers either have become use to the look-or the discount around here is between $14,000 to $15,000 off sticker, and that’s enough to where they don’t care about the clunky right and left front fenders of the truck.

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