New Pickup Trucks are In Demand, Short Supply

Detroit Free Press - April 14, 2013

U.S. new pick­up trucks sales rose 23% in the first quar­ter and are expect­ed to approach lev­els not seen since before the finan­cial cri­sis.

But GM, Ford and Chrysler strug­gle to meet the demand.

That means robust prof­its, at least for the Detroit Three in North Amer­i­ca. With gas prices slid­ing trend­ing toward $3 a gal­lon, con­trac­tors, ranch­ers, farm­ers and truck lovers at large like­ly will be stream­ing into show­rooms for the fore­see­able future.

Here’s the chal­lenge: Gen­er­al Motors, Ford and Chrysler closed sev­en full­size or medi­um-duty pick­up truck plants over the last decade. Now they have to keep up with about half as many plants and con­sid­er­ably few­er work­ers.

Pick­up sales still have not returned to the heady heights they reached dur­ing the hous­ing bub­ble — they hit near­ly 2.5 mil­lion in 2005. But the aver­age truck is more than 13 years old, accord­ing to Citi Invest­ment Research. Many must be replaced.

Most pick­up plants are oper­at­ing on three shifts or with work­ers putting in sub­stan­tial over­time. For now that boosts the mar­gin of already very prof­itable vehi­cles.

“If the gas prices dip, that will cer­tain­ly help with the over­all lev­el of truck demand,” said Jesse Toprak, an ana­lyst for TrueCar.com. “That will most­ly help with the lifestyle pur­chas­es of trucks.”

The Detroit Three are reap­ing a dis­pro­por­tion­ate share of the prof­it from this pick­up renais­sance.

Gen­er­al Motors, Ford and Chrysler col­lec­tive­ly account­ed for 93% of full-size pick­up sales through March, while Toy­ota Tun­dra and Nis­san Titan cap­tured just 5.4% and 1.2%, respec­tive­ly, of full-size truck sales.

GM is launch­ing the redesigned 2014 Chevro­let Sil­ver­a­do and GMC Sier­ra, which means pro­duc­tion will increase grad­u­al­ly. To keep deal­ers stocked with the old 2013 mod­els, plants in Ft. Wayne, Flint and Silao, Mex­i­co, built thou­sands of extra trucks in 2012.

At the end of March, GM’s inven­to­ry stood at a high­er-than-nor­mal 111 days sup­ply for Sil­ver­a­do and 132 days for Sier­ra accord­ing to Ward­sAuto.

The return of the pick­up mar­ket means more over­time and job secu­ri­ty for thou­sands of work­ers.

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