The market for pickups may be changing

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In the last days of summer, the last thing on people’s minds is buying a new vehicle. Holidays dominate spending. Parents are playing back-to-school games with their kids, Inventory builds up on the sales lots and the Labor Day sales hope to attract attention and boost sales. The motor manufacturers have just released their monthly sales figures and the cumulative total just dipped below the estimates for this year. This even though retail sales showed a 9% increase in the third quarter. The trade was hoping for more serious improvement. It had laid out lower interest rates on finance, expecting more people to come forward to replace their older vehicles. Only Ford and the top three Japanese manufacturers produced sales increases. General Motors and Chrysler were disappointing, in part because of supply problems for their pickup trucks.

What has happened to General Motors?

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This year, GM made a more serious move in the pickup market, spending quite heavily in redesigning the Sierra and Silverado. There seem to be three problems:

• fewer buyers are looking for high-end pickups;
• there was only a limited supply of the V8 models;
• the Ford F-150 Raptor was selling too strongly

Let’s be clear about the situation. Like the other manufacturers, GM made some good offers on interest rates to attract business but, knowing there were going to be supply problems, also limited the number of models the dealers could order. On its own, this probably explains why GM saw an 11% drop in year-on-year sales for September. But the critical additional factor was the strength of the demand for the Ford Raptor.

Indeed, the sales were so strong, Ford announced it was increasing production volumes to meet the demand, i.e. they would manufacture five vehicles an hour instead of the usual three. There’s no doubt Ford has hit the jackpot with this model. The market numbers show the Raptor spent an average of only fifteen days on sales lots. That’s a remarkably fast turnover when you consider the industry shows the average makes and models spend sixty days on the lots before they are sold. The result was that Ford sold almost 60,500 F-series trucks in September. That’s a 10% year-on-year increase in pickup sales. For the record, only about 45,000 Sierra and Silverado trucks sold

Ford grows more dominant

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When you look at the level of competition between Ford and GM, there’s little doubt Ford has won the battle in the pickup market this year. It has a better product at a competitive retail price than GM. Indeed, comparing the Raptor Special Edition with the standard Silverado, the high-end model of the Ford is a few hundred dollars more expensive but outselling the standard GM model by a phenomenal percentage. It seems buyers think GM has missed the ball with its redesign and is voting with its feet. This presents GM with major problems. With serious capital invested in its new models, it’s losing ground to Ford. It’s going to be difficult for GM to recover.

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