Americans Don't Love Trucks Anymore

High gas prices and the housing bust combine to drive pickup truck sales down to their second lowest level since 2000

By any measure, March was a lousy month for the car business. But for Detroit, it was truly dreadful.

Pickup trucks are taking a real beating. The combination of high fuel prices and the housing market is hammering sales of Detroit's best-selling vehicle—the large pickup. The downturn comes just as all three Detroit carmakers are coming out of big restructuring actions, and two of them—Ford Motor (F) and Chrysler—are bringing new pickups to market.

While the pickup business has been struggling for some time, March was especially tough considering that there were some big sales on pickups. Sales of Ford's F-series and the Chevrolet Silverado were down about 18%, and the Dodge Ram was off 26%. Mark LaNeve, GM-North America's vice-president for sales and marketing, was understated when he said: "March was a soft month for traditional trucks."

Drop-off in Pickups

It wasn't that automakers weren't making it easy to buy a truck. The discounts were generous. General Motors (GM) had 0% financing. Ford offered rebates as high as $5,500. Dodge also offered $5,000 off on the Ram according to Automotive News. Toyota Motor (TM) was also singing the blues with its Tundra pickup, offering 0% or up to $5,000 off. Says J.D. Power & Associates analyst Tom Libby: "They spent a lot of money on incentive, and they still couldn't hold sales up."

What's worse is that prices for used pickup trucks fell for the sixth straight month, notes Lehman Brothers (LEH) analyst Brian Johnson. In March, used pickup prices fell faster than for most other types of vehicles.

Used pickups are losing their value quickly. The average three-year-old truck lost $4,200 over the past year, says Ricky Beggs, vice-president and managing editor of the Atlanta-based Black Book, which tracks used-car prices. Two years ago, a three-year-old pickup only lost $2,650 in value, he says. Even diesel pickups—valued by businesses because of their better fuel economy—have been losing value. "They have been going in the can," Beggs says. "There's no question it's related to the contraction in housing."

Declining Source of Strength

With construction down, contractors aren't buying many new trucks. And for the recreational pickup buyer, gas prices have become a problem. Even some dealers in Texas, where pickups are king, were complaining. "We were down quite a bit," says James Hardick, part owner of Moritz Chevrolet in Fort Worth.

The sales numbers don't tell the whole story. Last month, large pickups were just 11.7% of the market. That's the second-lowest share of the market since 2000, according to J.D. Power.

Toyota saw a big boost in pickup sales, but the company needed big incentives to sell them. Sources close to the company say that Toyota has slowed its pickup assembly line in San Antonio. Meanwhile, Ford is preparing to launch a new F-150 pickup, and Dodge will soon sell its new Ram. Chrysler Chairman Robert Nardelli says he has been counting on the new truck to help tow the company through its fix-it stage.

Even with sales falling, pickups are a big profit center for the Big Three. But the ailing truck market will be problematic for companies selling even freshened models.

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