January 15, 2008 in City

Pickups duke it out, buyers win

Associated Press The Spokesman-Review
 
Associated Press photo

The Dodge Ram is displayed at the 2008 North American International Auto Show on Monday in Detroit. Associated Press
(Full-size photo)

DETROIT – Pickup buyers will be the winners when the new Ford F-150 and Dodge Ram trucks go on sale this fall, but automakers could wind up the losers if heated competition in the all-important segment forces them to keep prices low.

Automakers are facing the daunting prospect of selling pickups in a slumping market that has been hammered by the slowdown in home construction. U.S. pickup sales fell 6 percent in 2007, compared with a 3 percent drop in vehicle sales industrywide, and analysts aren’t expecting things to improve anytime soon.

“There’s no chance of pickup sales reviving until the economy recovers,” Mike Jackson, chairman and chief executive of auto retailer AutoNation Inc., told the Associated Press on the sidelines of the North American International Auto Show. “I think everyone’s plans for the pickup truck segment will be difficult, new product or not.”

Incentives helped automakers weather the downturn in 2007. Dodge piled more than $6,000 per truck in incentives on its old Ram pickup last year, while Toyota Motor Corp. spent an uncharacteristically high $2,827 per truck on its new Tundra, according to auto research site Edmunds.com.

Incentives will likely be used again this year, hurting automakers’ profit margins on pickups, which are traditionally some of their most lucrative vehicles. Toyota and General Motors Corp., which introduced a new Chevrolet Silverado last year, will fight to defend their turf.

“Our Silverado and Sierra have been very well received,” GM Chief Financial Officer Fritz Henderson told the AP. “We like our pickup trucks. It’s not like they’re going to be long in the tooth.”

As a result, Ford Motor Co. and Chrysler LLC may be forced to put incentives on their vehicles as soon as they hit the market. The F-150 and Dodge Ram were revealed this week at the Detroit show.

Chrysler Vice Chairman and President Jim Press said the company is optimistic about the Ram’s chances.

“If you go into a tough market, would you rather have an old truck that needs help or would you rather have a King Kong of trucks that will have the advantage of being a superior product going into that environment?” Press said. “I think it’s just really good timing.”

Johnson said Ford, in particular, is depending heavily on the F-150 to improve its profits. F-series trucks have been the best-selling pickups in the U.S. for 31 years.

Still, Jackson said automakers know good products and new features will help more than incentives. Automakers have been cutting incentive spending, and in December, spending per truck was down nearly $200 compared with the two previous Decembers, Edmunds said.

Jackson said overall U.S. sales in 2008 will likely be even lower than 2007, when they were at their lowest level since 1998. Jackson said he’s impressed by both the F-150 and the Dodge Ram, which were rebuilt from the ground up and have a host of new features. He said they can help transform Detroit’s image with consumers.


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