Big Truck Sales Means Big Automaker Profits

Average transaction prices for pickups on the rise.

by on Aug.04, 2015

A well-equipped version of the 2016 Ford F-150 Limited will push over $60,000. The makers average transaction price is up $3,200 in July.

New vehicle sales in July rose to heady levels – an annual rate of nearly 18 million units – led by expensive vehicles: luxury sport-utilities, crossover and … wait for it … trucks!

The fact that trucks are big sellers isn’t big news. For the past 30- years the top two best-selling vehicles in the U.S. have been full-size pickups: the Ford F-150 and Chevrolet Silverado.

Truck News!

The industry moved a lot of metal in July, according to TrueCar, Inc. noting that July’s revenue for new vehicles will likely set a U.S. record high for the month of $47 billion, up 2.1% versus the same period last year and trucks are leading the charge.

Automakers are generally smart cookies when it comes to spotting trends as over the years, they’ve noticed that the more trucks they’ve equipped with leather and other premium materials as well as technology, the more trucks they’ve sold.

Sales of new trucks are going strong, adding to the bottom line of automakers.

The more goodies makers put on the truck, the more money they make on them.

The average pickup sold for $45,700 in July, or 4.8% higher than a year earlier, according to Kelley Blue Book. For the first half of the year, two of the 10 best-selling models priced above $50,000 were pickups — Ford F-Series and Ram (1500 through 3500).

“The volume and profit these vehicles are delivering can’t be overstated, and both figures could go even higher when Ford fully leverages the new F-150′s production capacity in the coming months,” said Karl Brauer, KBB.com analyst.

Ford officials said the average transaction price for the F-150 last month was $44,000: a $3,200 increase over last year. The jump comes even as the company’s incentives on the new truck were $1,000 higher.

(Luxury utes, crossovers, trucks drive strong July auto sales. For more, Click Here.)

“Customers are really enjoying the new F-150. They love the technology; they love the capability of the vehicle,” said Erich Merkle, Ford sales analyst. “What’s even more interesting is that while retail sales were up 13%, we have established and are maintaining record average transaction prices of $44,000 per truck.”

The drop in gas prices have helped to keep truck sales moving. The national average price for regular unleaded gasoline continues to drop as motorists are now paying, on average, the lowest price for gasoline during July since the recession year of 2009.

Chevy Silverado sales were up 33.9% in July. The brand has been gaining on its rival the F-150 in the first half of this year.

The national average price is $2.71 per gallon, which is a nickel per gallon less than one week ago and seven cents less than one month ago. Drivers are saving 82 cents per gallon at the pump compared to a year ago, according to AAA.

Although sales for the F-150 were sluggish at the start of the year, Chevy and Ram have exploited the pricing trend selling truck as record levels. In fact, Silverado sales were up 33.9% in July, despite the fact that truck is due for a major makeover in the months ahead.

(Click Here for details about drop of gas prices in July.)

Sales of the Ram pickup truck increased 1 percent in July, the pickup’s best July sales in 10 years. The Toyota Tundra was up 1.9% in July and is up 4.7% for the first six months of the year. Even Nissan Titan sales rose last month – 5% – despite being down for the first half of 2015.

The good news continues to roll in for truckmakers as well: gas prices are expected to remain low … really low. GasBuddy.com experts say that before Christmas, as many as 20 states could have average gas prices below $2 per gallon as the national average for December slips to $1.98.

“We’re confident that our projections give consumers more than accuracy; we think they’ll help them identify some savings that should come in handy at Thanksgiving and Christmas,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.

(To see how Chevy pushed the second-gen Volt to get 53 miles all electric, Click Here.)

“It’s interesting to remember that last year the national average shed more than $1.27 from Aug. 1 through Dec. 31 when the U.S. average was $2.24,” DeHaan added. “This year, if we see just half of that decline it will bring us to below $2 per gallon.”

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2 Responses to “Big Truck Sales Means Big Automaker Profits”

  1. Jorge says:

    Trucks and SUVs have been cash cows since the Big three discovered non-trades people wanted pick-up trucks for some reason and were willing to pay a premium for them.

    • Gene says:

      “Non-trades” people (“ordinary families” in common English) have discovered that the tiny, cramped FWD econoboxes that the government has foisted upon us aren’t as comfortable as the good old V-8 RWD family sedan (Impala, Caprice, LTD, Galaxie, Fury, Catalina, etc.) used to be. They’ve discovered that a Silverado or F-150 Crew Cab pickup is a good riding, comfortable, capable substitute… and infinitely cooler than a Minivan.

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