Pickups: You Want 'em, You're Buying 'em, but America Now Needs to Build 'em
The Detroit Three has something of a problem. Sales of their cash-cow, bread-and-butter full-size pickups hardly waned during the extended pandemic lockdown, and are, as of a week ago, selling just as they had before anyone heard of the coronavirus. And yet the plants tasked with building them still aren’t online.
Automakers that just months ago were concerned with higher-than-average inventory levels now have the opposite problem.
As reported last week, Ford, General Motors, and Fiat Chrysler will commence production on a temporarily limited basis on May 18th. Getting the UAW’s approval re: worker health protocol and a green light from the state of Michigan was necessary in order to ensure parts flow (manufacturing begins May 11th) and smooth assembly sailing once vehicle production resumes.
The Detroit Three now await the starting gun and eventual ramp-up. However, customers have already returned to their truck-buying ways — not they ever entirely abandoned them. Even during the depths of the lockdown in late March and early April, sales of full-size pickups in the U.S. never flagged more than 25 percent below expectations, according to J.D. Power data. In the week ending May 3rd, that volume deficit was all but gone. Sales of the big boys wad down only 1 percent below the firm’s pre-virus forecasts.
In an investor chat last week, FCA CEO Mike Manley commented that he “can’t remember when” the automaker had such low inventory levels, CNBC reports. When production resumes, focus will be on what sells — regardless of automaker.
“I’m pretty sure you’re going to see another relatively strong month with trucks, being there are certainly configurations that we’ll be running short,” Manley said, confirming that his company’s supply of certain Rams is drying up. Ram, you’ll recall, just emerged from a boffo sales year.
Talking to analysts last week, GM’s chief financial officer, GM CFO Dhivya Suryadevara said the automaker is currently seeing low truck inventory. Pickup production will be top of mind when plants come back online, she said, adding that the company is keeping a “close eye on dealer inventory” — especially in regions that side-stepped much of the COVID carnage.
Count Dallas, Texas among those regions. That market consistently performed at or near the top of all U.S. cities in terms of sales stability over the past couple of months, never flagging by more than a modest amount. In comparison, Detroit and New York City saw their sales fall to essentially zero. Not anymore, of course.
Ford sells more full-sizers than anyone, so for its sake, hopefully the restart of its F-150 and Super Duty lines will bolster stock ahead of any shortages on the dealer side. That said, the Blue Oval plans to enter production with a limited workforce in tow. Every plant that previously operated on more than one shift will drop a shift in the near term.
[Image: General Motors]
FreedMike on May 12, 2020
Well, as Bark would point out, consumers aren't the ones buying these - dealers are. And because manufacturers make more on these, it makes sense why so many are being built. But I'm willing to stand by what I predicted some time ago - I think the sedan/small car market is poised for something of a comeback, particularly if the economy doesn't recover quickly. And they won't be bought by the stereotypical "guy with a 400 FICO and no money" - they'll be bought by more fiscally cautious folks who would rather spend $30,000 on a practical purchase than $50,000 on a fashion statement, which is what trucks are for most folks. Time will tell, I suppose.
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