Saturday, September 02, 2006

Trucks jumpstart cars - many car buyers shifting to purchasing trucks or vans - Industry Overview

We told you so. Exactly one year ago, the cover story for Ward's Auto World branded 1992 the "Year of the Light Trucks."

As things turned out, it was that and then some. In the 1992 model year, truck sales shot up from 4.1 million to 4.5 million, a very healthy 8.9% increase, while car sales dropped 2.4%, from 8.3 million to 8.1 million, says Ward's Automotive Research.

Cars, not trucks, are the problem as the industry tries to ignite an across-the-board recovery. "The shift toward trucks accelerated during the 1980s with the introduction of minivans and sport/utility vehicles (SUVs)," says Keith C. Macgee, general marketing manager for Ford Motor Co.'s Ford Div. "This year, having new products such as the (Ford) Explorer and the (Jeep) Grand Cherokee has further accelerated all of that. There are almost certainly other things we don't understand."

Mr. Macgee sees the truck share of the U.S. light-vehicle market growing from 33% to 35% by the end of the decade.

"All indications are that they (truck sales) will continue strong," says Kurt L. Ritter, marketing manager-trucks at General Motors Corp.'s Chevrolet Motor Div. "There are reasons the truck side will do better than the car side. "Ironically, he says, the economic demographics across the broad spectrum of new truck buyers is somewhat better than that of car prospects. "For (model year) '93, we think we're going to do as an industry almost 9% better at 5,050,000," estimates Craig Lechowicz, an analyst at GM's GMC Truck Div.

Just how important trucks have been to Chrysler Corp. is symbolized by a new advertising campaign being launched at the same time as the new LH sedans; it touts Chrysler as "The Minivan Company."

Everybody in the industry now concedes interesting and mysterious things are going on in the truck market that go well beyond the cliche that truck sales traditionally lead car volumes out of a recessionary sales period. That indicator developed when using the word trucks meant trucks in the traditional sense: heavy-duty pickups and commerical vans. Contractors and tradesmen were thought to feel the first impact of looser business purse strings as an economic recovery began.

Not many plumbing companies or roofing operations are buying red-hot sellers like fully loaded $25,000-and-up Jeep Grand Cherokees or Ford Explorers. And it's pretty much just plain folks, not commercial accounts, that allowed Chrysler to set an all-time record for minivan sales during the model year.

Full-size pickup trucks, where commercial accounts are important, jumped 14.2%, but compact pickups trailed the truck segment with a relatively anemic increase of only 0.8%.

Semantics as much as sales numbers have analysts going slowly berserk trying to explain what is happening. Cars are basically cars. But light trucks have become members of a category in which the customers are as diverse as the hodge-podge of vehicles covered by the grouping.

Who could have predicted pickup trucks that move down the freeway faster than Porsches? GMC still offers its super-fast Typhoon SUV, and Ford will weigh in shortly with a 5.8L V-8-powered Lightning F-150 pickup. Chrysler's '94 T 300 truck will have an optional V-10. And safety touches such as air bags have become crucial in selling minivans.

Price clearly is no object to a growing minority in the truck market, while experts say rebates and other marketing gimmicks continue as proven winners with people buying less-luxurious vehicles. Truck buyers also tend to be more interested in engine and drivetrain options than typical car buyers.

Given the broad and growing definition of just who might be a truck buyer, experts say the excitement should only grow. Few suggest anymore that baby boomers will outgrow all this, and there are strong indicators that selections from the truck market, even at luxury-car prices, are seen as stylishly practical.

"Trucksare the cool thing," laughs Chevy's Mr. Ritter.

What's new for '93?

In small SUVs, American Suzuki Motor Corp. may be on to something with the introduction of a 4-door, 4-wheel-drive version of its Sidekick. At a list price of $12,999, it may strike some as an attractive bargain compared with upscale brethren costing more than twice as much.

In sheer numbers, however, the Jeep Wrangler remains king with a 9.4% sales jump in '92. Little change is planned for '93. The same is true for the second-place Chevrolet Geo Tracker, which was down 3.6% for model year '92.

In the fiercely competitive midsize SUV market, American marques did a number on their Japanese counterparts in '92. Toyota's 4Runner was down 13.3% while the Mitsubishi Montero plunged 33.3%; the Ford-made Mazda Navajo drops 9.1%; the Nissan Pathfinder slides 10%; and the Isuzu Trooper loses a stunning 61.2%. But the Isuzu Rodeo is a clear winner for the Japanese makers by nearly doubling sales to 38,000, up 81 %.


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