New Pickup Trucks are In Demand, Short Supply

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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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