November 5, 2010
Truck Sales Up: Signs of an Improving Market or a Short Memory?
Truck sales outpaced car sales by the highest margin in fiver years, with trucks, SUVs, and minivans representing 56% of the market. According to some reports, this uptick in large vehicle sales could be an indication that the market is improving. Others, as the Wall Street Journal explains, are less confident that increased vehicle sales are signaling much about an improving economy. After all, car and light truck sales are still under 12 million units annually, as compared to the 16 million range seen in the better economic times not so long ago.
One possible "upside": Improved larger vehicles sales tends to help the Detroit automakers, and with the large taxpayer stake in General Motors, this could mean a larger IPO, and thus a better return on "our" investment. So we have that going for us, which is nice.
When gas prices passed $4 per gallon in 2008, large vehicle sales took a big hit. Although gas prices have not come back down to the sub-$2 per gallon prices that fueled the last SUV boom, prices have remained relatively stable, and relatively low (under $3 per gallon) for the past year or so, which I suspect has also helped people ease back into their large vehicle habit. This, of course, comes with its own risk: if gas prices go up, the economy remains stagnent, and people with these big new SUV payments freak out, the economy will take another big digger.
Ultimately, I am skeptical that the modest improvement in vehicles sales is telling us much about the economy, other than perhaps things aren't quite as bad as they were. One thing that is clear: the U.S. consumer has a very, very short memory.
Ah, did you consider that some people need trucks?
Ever put sheets of drywall or sacks of grain into a Prius?
Even at the current low ebb construction requires trucks, farmers require trucks, and people in rural areas often need trucks.
Also, a pick up is often cheaper than a sedan for a go-to-work vehicle, and has more utility after hours.
Posted by: save_the_rustbelt | Nov 8, 2010 7:32:55 AM
In fact, I traded in my truck, which I loved, when our major renovations were done, and I didn't need to haul sheets of drywall anymore. Trucks are important and helpful, and should be available for those who need them. Of course people need trucks, but there is no way that more people in this country need trucks than cars. Some may long for the time when that was true, but now is not that time.
Posted by: Josh Fershee | Nov 8, 2010 7:50:02 PM
The definition of a "truck" has expanded to include pickups, SUV's, minivans and smaller SUV's according to the report cited. The SUV definition has also expanded to include car cross over models such as the Ford Flex or other fuel efficient "SUVs", so I would attribute this trend as merely a change in definition not actual consumers' short memory.
Posted by: Nate P. | Nov 10, 2010 7:21:25 AM
Nate, the report notes that "trucks" includes pickups, SUVs, minivans and smaller SUVs, but that doesn't indicate a change since the definition. I agree that cross-overs have inflated the numbers, but cross-overs are more like SUVs than the cars upon which they are based. That is, the Ford Fusion gets better MPG than the Edge. The numbers indicate that consumers are buying lower MPG vehicles, regardless of definition, which leads me to my view that consumers have a short-term memory.
Thanks for the comments, and stay tuned for a response on the NPR piece.
Posted by: Josh Fershee | Nov 10, 2010 10:43:40 AM