How Gas Price is Affecting Pickup Trucks

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.

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.

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!!

Comments

[fg144331:]

As I was filling up with $4.379 gas last week, two guys in back of me with a pickup we chatting that their truck only gets 12 mpg. Oh well!
People seem to have the idea that gas will eventually go down, that is a wild dream form sure. The car mfgs will soon realize that ELECTRIC is the only way out of this mess or they won't be around any more.

2008 Jun 08 10:38 AM

[livedlong:]

you are missing the point; the truck sales are down for the same reason computers sales are down: people have no money. Those who needed trucks will still need them, they will not fit their 'stuff' into ford fiesta.
I want GMC Yukon EL; and I will get it regardless of the gas price, as soon as I can afford it.

2008 Jun 08 10:48 AM

[Bruce L.:]

You have got to use some common sense. I have a GMC 2500 HD that I use for towing my fifth wheel and boat. It stays in the garage unless I need to use it for the purpose in which it was designed. We take the Hyundai Azera when we run errands or head back to our Colorado house. I have found when towing my fifth wheel, if I lift a bit and average 61 mph instead of 65, gain about 1.5 mpg. Funny if I go a little slower, I actually lose 1 mpg because the truck can't hold it's speed in 6th gear as often.

I do agree with fg, some form of electric power for our daily drivers seems to be the short term solution. Bottom line, plan your trips, drive smart and, if you have the option, use the vehicle that is the most appropriate for the task at hand. You overall reduction in the amount of fuel purchased will surprise you.

2008 Jun 08 11:06 AM

[User 206904:]

Electric pickups? Well when they can tow 10,000 lbs (up hill), go 300 miles on a charge and cost the same as a gas truck then I will buy one. With current technology you would go about 2 miles before running out of juice.

2008 Jun 08 01:24 PM

[leh:]

Re electric truck range limitations, the 2-mile range is way off: Smith, a long time e-truck maker in England, has been producing medium duty 4-12 ton e-trucks for decades now aimed at local trades and delivery men using good old lead acid. Their basic 4.5 ton delivery van claims 100-mile range with a top speed of 50 mph, plenty for local and city driving.

BTW the same company recently signed a contract with the US lithium battery supplier, Valence, which could really light a fire in this segment if they can keep costs down. Smith also plans on opening a new production plant here in the US, which means you may be seeing these vehicles on our streets soon.

Exciting stuff--where were Ford and GM through all this? Sleepwalking, no doubt, or crushing their EVs in favor of Hummers.

www.smithelectricvehic...

2008 Jun 08 02:27 PM

[leh:]

P.S. I've been driving domestic pickup trucks of various brands all my adult life, dating back to the mid-70's. Guess what? The full-size V-8 models still get exactly the same pathetic 12 mpg on average--if that--that I was getting 30 years ago (which ironically dates back closely to the first oil crises when Jimmy Carter was President).

My point is we've had 30+ years to respond to this and have done nothing but up horsepower, acceleration, and creature comforts (read add weight). No mystery why Detroit will suffer mightily with each dollar ride in crude. Hemi-powered Ram anyone?

2008 Jun 08 02:33 PM

[maikata:]

If the price of fuel stays at its current price the days of the country cadilac are over. No longer will owning a pickup truck for the rare occasion to use it for its designed purpose (towing or hauling) be practical. The only people buying trucks will be those with legitimate business reasons or those with a disposable income large enough to do as blahargoue said he does. Park it except when pulling the boat or RV. The days of the pickup truck for a daily transportation are over.
Nissan, Toyota and Mazda all used to make a fuel efficient small truck as did Ford (Ranger) and Chevy (S10) but as the demand for more horse power and crew cabs became the norm the fuel efficiency was sacrificed. So all of the truck makers are suffering because the average buyer has no need for it. Common sense prevails and fuel efficient vehicles are the order of the day.
There is no way any the worlds auto makers could respond to the current market demands for fuel efficient cars or trucks. The market changed to quickly. The speculation in the commodities markets has pushed fuel prices through the roof and the current price for a barrel of oil is baseless aside from greed and or manipulation. Normal market conditions have not pushed oil prices this high. The concern over Israel and Iran is a smoke screen, China and India are buying more oil but the producers are keeping pace with demand.
There was a small blurb in the Wall Street Journal about an investigation into the price run up on the commodities markets. My guess is there is some manipulation going on but by who remains unknown.
A barrel of oil is really only worth about $40. Will it drop to that level again remains to be seen.
Can automakers plan for $1.50 per gallon gasoline in the near future and hold off on moving away from the production of profitable SUV and truck lines? That is the business gamble they all are faced with.
Personally, I believe energy and fuel commodity markets should be outlawed. The rampant speculation in the price of these items is a direct threat the world economies and national security of more than just the USA. Just image what would happen if the flow of oil stopped for just 1 month. There would be anarchy and mass starvation.

2008 Jun 08 02:54 PM

[User 206904:]

re: electric trucks

I doubt those ranges and speeds are with full loads, in fact it is impossible for a battery truck to haul 10,000 lbs at 50 for 100 miles let alone 20.

BTW, modern pick ups have come a long way from the 12 mpg days. My Ford gets 18 at 80 and can haul 10,000 lbs at 60+ aand still get 11 (and that is going over mountain passes.

Like I said, when electic trucks can equal or beat this at a competive price I will buy then. What I don't buy is the fantasies of battery vehicle proponents.

2008 Jun 08 03:22 PM

[guythomas:]

We, the greatest country in the world are addicted to oil and the supply of cheap oil is at an end. Like most addicts we are looking for our next fix and are willing to lie to ourselves to get it. We need to suck in our egos, get off oil and get back to business. I don't feel the least sympathetic toward Detroit as they have had plenty of time to develop the hi-mileage vehicles we need and frittered it away while the Toyotas of the world engineered the Pris. Whatever is driving gas towards $5 will force Detroit to give us what we need or we and they will go out of business.

2008 Jun 08 04:24 PM

[Nextel Acce...:]

there is no short term fix for this problem

2008 Jun 08 09:50 PM

[DavidR:]

While everybody scrambles to make electric cars and plug in hybrids, does ANYBODY seem to remember that our electric grid is maxed-out and out-dated? What good is an electric car in California when all the air conditioners are running and there are rolling blackouts? Doesn't anybody remember when the entire grid on the north east went dark? When the efficient powerplants can't keep up do you know where electricity is generated???? (hint: stationary Diesel generators). Do you really thing that when all 3 million cars in Los Angeles are plugged in at night that it won't trip the system? Plug in cars are NOT the answer, no matter how far the battery range is. Lighter cars, driven less often, mass transportation, urban centralization, things like this. Cars used to be built that got 50mpg. Honda Civic CVCC, Fiat 850, Morris Minor. The problem is WEIGHT. Air conditioning, roll over standards, crash standards, big wheels, 4 doors. And the need for speed. Sure, a VW bug couldn't get over the grape vine at 45mph, but so what? It got over it. You don't need a truck to pull a 5th wheel if you take a train and stay in a hotel. You don't need a V-10 to pull your boat if it is 12' long, and aluminum. Just strap it to the roof of your VW bus.

2008 Jun 08 11:18 PM

[ford dealer:]

Ford needed to increase it's car line 15 years ago but instead built it's empire on f series trucks and their $10,000.00 dollar grosses. All the while they have cut our margins to less than $1100.00. Now they want us to feel sorry for them

2008 Jun 09 08:18 AM

[fantasyworld:]

Funny how Detroit automakers are being attacked for simply responding to customer demand. Until recently, trucks and SUVs were demanded by consumers, so that's what was produced. The same goes for adding "creature comforts", as technology advances, the consumer demands that these technologies be incorporated into vehicles - without adding cost to the vehicle. The demand is now shifting to smaller cars, but the dramatic shift in demand has happened "overnight". Detroit will respond to this change in demand, but it will take time.

Toyota and Honda have both tried to get into the truck and SUV market, but neither has managed to compete with Detroit. Now that demand has shifted to small cars, the imports are well positioned for now, but when Detroit shifts focus to this market, they will succeed.

2008 Jun 09 08:40 AM

[Bruce L.:]

Just to clarify, I wasn't referring to electric powered pickup in my earlier post. I was referring to electric powered commuter cars. HP and torque are still required in the pickup truck market for those of us that tow or haul really heavy loads. Just don't over buy. I used to drive diesels, but my towing requirements changed when I dropped to a smaller fifth wheel. I bought gas truck that gives up two mpg to my last two diesels. At nearly a dollar a gallon difference in the price of fuel, I'm comfortable with the choice, but someone else may have different needs.

Pick-ups have come a long ways since the 70's and 80's. More power and better economy. I too used to get around 12 mpg in my 85 Chevy. I now get 15 to 17 when not towing anything on highway trips with my gas power GMC, which has 120 more H.P. than that '85 truck.

If my boat was a twelve footer, I'd tow with something compact. My boat weighs in at over 8000 pounds so, I still use a large truck.

Once again, buy smart and drive smart if you can. Plan your trips and use the most appropriate vehicle for your needs. I do really have a lot of empathy for folks that must commute, put kids thru college, pay the mortgage in decreasing housing market and don't have the present ability to own multiple vehicles for specific uses. I have been there and done that (I even lived in a 26 ft RV for awhile after a really pricey divorce!) I'm extremely thankful that life has been good. But, even with "disposable income" as one poster wrote, common sense can still goes a long way in cutting your personal fuel usage.

2008 Jun 09 10:08 AM

[autoguy:]

The more cylinders and the more weight of your vehicle, the lower your fuel economy will be, especially in stop and go around town driving. That's basic physics.

The recreational truck market was heavily V8 4WD or AWD -- not V6 2WD where you get better fuel economy. Give the manufacturers a year to adjust their production mixes (can't be done overnight) and you will see some improvements. The end result will never be the same as a 4cyl econobox, but it will be acceptable to some.

Adding to the woes of $4 gas is the uncertainty factor.
Will I have a job in two month? Will gas continue to climb to $6? or $10? Until this stabilizes, there is no light at the end of the tunnel for the truck manufacturers -- Big 3 and Toyota/Nissan.

2008 Jun 09 11:49 PM