Seeking a pickup
Truck purchases in Texas turn flat this year
By SHANNON BUGGS
Copyright 2006 Houston Chronicle
TRUCKS always sell well in Texas, but this summer they didn’t sell as well as usual.
Texas still leads the nation in truck sales, and dealers say they are are doing better largely because energy companies are going strong, as are related construction and services businesses where pickups are a
must.
But when domestic truck sales in Texas, the No. 1 market for full-size pickups, are virtually flat compared with the previous year, as they were in June, July and August, the national sales declines look even worse.
"We’re not doing as well with full-size trucks as we did last year, but we’re doing better in Texas and Oklahoma than we are in the rest of the country," said Earl Hesterberg, chief executive of Group One Automotive, a Houston-based national auto-dealership chain.
That’s because soaring oil prices in Texas and Oklahoma mean higher gasoline prices and more money flowing into and out of the oil industry. Many energy companies are spending the extra cash replacing worn-out pickups and adding trucks to their fleets.
"Retail may be kind of flat compared to last year, but commercial is up significantly," said Carroll Smith, owner of Monument Chevrolet in Pasadena. "I
am almost double com-
mercial sales."
But not all dealers have that buffer. To prop up summer retail sales, manufacturers used discounting and free financing, giving both Texas and the Houston region about a 1 percent increase over last year.
Even more telling was the number of days it took for dealers to move trucks off their lots.
Sixty to 65 days is average in any given month, says Tom Libby, an auto industry analyst for the Power Information Network. However, large pickup trucks sold in August sat on dealer lots one day shy of 90 days in the 26 markets surveyed. In Houston, the August trucks had been baking in the sun for an average of 79 days, while in Dallas-Fort Worth the average was 81 days.
Turnover is slower
"Large pickup trucks are turning slower than the rest of the new vehicles," Libby said from his office in Detroit. "The inventory for full-size trucks nationwide is high. For Ford and GM, it’s not quite as bad as it is for DaimlerChrysler."
The Stuttgart, Germany, company’s U.S. Chrysler division is expected to lose $1.5 billion in the third quarter as it readjusts its product line.
To deal with a stockpile of light trucks and sport utility vehicles, DaimlerChrysler said Tuesday it will reduce dealer shipments of new Chrysler, Dodge and Jeep vehicles.
"I heard that, so I’m stockpiling right now," said Alan Helfman, who runs Helfman Chrysler Jeep on Kirby. "I’ve put in close to 250 orders to make sure I’m covered because it’s a little different around here; there is so much oil-related business."
Whether an oil wildcatter or a home contractor, a significant portion of truck buyers purchase full-size pickups because its the only kind of vehicle they can use.
Toyota goes full-size
And that is the market Toyota wants to attract to its redesigned Tundra that will be built in San Antonio starting in November.
"We feel that the full-size truck market is the one segment we need to focus on for our future growth," Toyota spokesman John Hanson said.
On Monday, the Japanese automaker unveiled a long-bed version of the Tundra at a national conference for manufacturers of after-market parts and accessories for work trucks, such as plows and ladder racks.
Hanson said the current Tundra "is basically a personal use pickup," but the company is betting the improved Tundra will appeal to people who "treat their trucks like a tool — they use and abuse them."
Toyota sells about 100,000 of the 2.1 million large pickups sold every year, Hanson said, while market leader Ford sells about 900,000.
And by manufacturing the Tundra in truck country, the automaker’s intentions to take market share from the traditional brands that dominate the full-size truck segment are clear.
Getting to or staying at the top of truck sales is so important because trucks are the least expensive vehicles to make, and they maintain the biggest profit margins.
"You make more money on the average pickup than on virtually every other vehicle sold," said Brett Hoselton, a senior automotive analyst in Cleveland with KeyBanc Capital.
It’s critical for Ford and General Motors to retain primacy in pickups to stay profitable, he said, but if they do, they could still sink into financial trouble if they don’t develop other products consumers want.
"You still have a generation that believes that Ford and Chevrolet trucks are the best vehicles on the road," said Hoselton, a scion of an auto dealer family. "But does the next generation bring a different perception? Do they start to lose customers because people grew up buying Hondas and Toyotas?"
Is Ford vulnerable?
Toyota’s truck challenge comes just as Ford’s falling stock price and chief executive change make it appear more vulnerable. But the automotive stalwart is not ceding any ground on pickups, especially in Texas.
To make sure Ford F150s continue to appeal to Lone Star customers, dealers across the state advise Ford executives on Texas tastes and trends, said Ben Poore, truck group marketing manager for Ford in Dearborn, Mich.
"We know if we can make it work there," he said, "then we can make it rock everywhere else in the nation."
