What's Next"¦ An F-150 for Free???

Well we all know the rise in gas prices is not new news. The price per barrel of crude oil is the leading story in virtually every daily publication. $120, $125, $130, $136 (a record) are all numbers we are unfortunately far too familiar with these days. With these prices translating to roughly $4/gallon at the pump not only are consumers taking a hit but so are the leading pickup truck manufacturers. The chart below shows that as gas prices continue to increase the demand for pickups continues to decline.

Truck demand  vs gas prices may 2008

Moreover, the month of May brought an end to the F-Series’ reign as the US’s best-selling vehicle, one of the industry’s longest running records. For the first time since 1991 the F-Series was replaced by the Honda Civic in this category. It should be further noted that Civic was not alone. Also coming out on top of the F-Series were the Toyota Camry and Corolla as well as the Honda Accord. This has obviously sent Ford and others scrambling to develop new ideas of how to push the declining pickup market. Ford recently announced employee pricing for everyone on all F-Series trucks for the month of June. This is big news and a desperation attempt by the OEM to put more money on the hood in a declining market. They are obviously trying to sell more vehicles and traditionally this tactic has worked"¦ more money on the hood translates into increased demand and increased sales"¦ Traditionally!!!

With the truck market, however, we’re seeing the opposite. While OEMs are offering record incentives, the increasing gas prices have continued to have a negative impact on demand. While incentives for both Ford F-Series and Chevy Silverado have had double-digit percentage increases, year-over-year demand has declined at a tremendous rate.

Truck prices vs. incentives may 2008

So what does this mean for the the future of the pickup market? I think it’s safe to assume that if gas prices continue to climb we will no doubt continue to see a decrease in pickup demand and, more than likely, drastic moves by the OEMs to rectify the problem. Already this week we have seen GM announce the possibility of a complete shutdown of the Hummer line. While this measure is highly unlikely for either the F-Series or the Silverado line, we can certainly expect to see record incentives being placed on all full-size pickups.

So is there any good news for these OEMs? Well apparently so. A recent article in Autoremarketing cited a study by Acxiom Corp. that found owners of the Detriot Big 3 (Ford, GM & Chrysler) light-duty trucks are far more loyal to their vehicles than owners of any import brand. Furthermore, these Big 3 pickup owners are more likely to have several pickups of the same brand and/or have another vehicle from their line in their driveway. So while they might be taking a big hit right now and offering incredible incentives, owner loyality will perhaps pull them through. Until then, employee pricing on a new F-Series has me wishing I waited until now to buy mine!!

About Leif Cefalo:
At Compete, Leif Cefalo is a Sales Director. Leif is responsible for Inside Sales for Compete PRO Enterprise at Compete. Before Leif joined the Compete Team he worked in Client Services for a company intelligence database start up. His career aspiration is to lead a successful sales team with a start up environment. Connect with Leif on LinkedIn at http://www.linkedin.com/profile/edit?id=436617&trk=tab_pro

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