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 “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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