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Truck sales roar back as small cars stall
Last summer's star car, the fuel-sipping, ever-green Toyota Prius, lingers now on dealer lots.
Six months ago, buyers lined up five deep for the first Prius off a transporter truck. Now, with gas prices about half what they were in July, Priuses are piling up on local lots, their sales down about 35 percent – even with their first incentive ever, a $750 rebate.
That's also true of other formerly strong small cars such as the Honda Civic, Nissan Sentra and Ford Focus, all of which have seen their sales drop 25 percent or more.
"Small cars are dead," said Jerry Reynolds, a former Ford dealer who hosts an auto advice show on Saturdays on WBAP-AM (820) and tracks the local auto industry. "Everybody hits the panic button when gas goes to $4 a gallon. But the first time they can go back to a truck or SUV, they will."
"For a while, anything small with a four-cylinder engine would sell quickly," said Ray Huffines, chief executive of Plano-based Huffines Auto Dealerships, which includes Chevrolet, Dodge, Chrysler, Jeep, Hyundai and Kia outlets. "That's not true now."
Remember all that talk last summer about a profound consumer shift away from trucks and into cars? Today the hottest vehicle at Freeman Toyota in Hurst is a 2- or 3-year-old Tundra pickup.
"We're in Texas, and when gas prices are low, people are going to drive their trucks and SUVs," said Dane Minor, general manager of Freeman Toyota. "If I could get my hands on a hundred 2005-2007 Tundras, I'd buy them. We literally can't get them out of detail before some are sold."
In the Dallas market, pickup trucks and SUVs are the hot rides at wholesale auctions. Two-year-old trucks have increased in cost by $3,000 or more in the last 90 days, dealers say, restoring all of the trade-in value they lost last summer when gas was $4 a gallon. Car values have remained flat at best and in some cases have dropped more than $1,000.
But this surge in truck sales comes with a twist: It's occurring mainly with late-model used trucks as used vehicles become a growing alternative to new cars and trucks. The new-vehicle market nationally remained down 37.1 percent last month.
For now, "it's chic to be cheap," said Brian Huth, general manager of Sam Pack's Five Star Ford in Carrollton. "People are thinking: 'I'm a new car buyer, but I might be better off for now with a used car.' "
Sudden shift
The challenge for most dealers these days is just maintaining a supply of trucks – a dramatic shift from six months ago, when many dealers didn't even want them as trades.
"We're out of new Tundras, and it's very hard to find good used ones," said Pat Lobb, who owns Pat Lobb Toyota and Scion of McKinney. "It comes down to the guy who needs a truck needs a truck. There are no substitutes."
Meanwhile, Lobb and fellow Toyota dealer Minor each have about 60 Priuses on their lots. Both bought extra Priuses that other dealers didn't want, figuring that gas prices might go up this summer and that demand for the hybrid sedans could increase again.
The shift in consumer interest from small, economical cars to much bigger trucks was predictable, following the same pattern as in previous gas price swings, said Jack Nerad, executive market analyst for Kelley Blue Book and kbb.com. When gas prices are low, consumers buy big – even when smaller vehicles might be more practical, he said.
"I liken it to putting consumers in a candy store and encouraging them to eat broccoli," Nerad said. "It won't happen."
The heavy demand for trucks is driving up used prices so fast that the gap is shrinking between the cost of a late-model used truck and a new one. For example, clean year-old Ford F-150 XLT pickups sold in late February at an area auction for an average of $25,100 – nearly $3,000 higher than the truck's estimated value in a recently published used-vehicle price guide.
Last fall, a commercial customer asked David Thomas at Subaru of Plano to get him five late-model, four-wheel-drive Chevrolet Suburbans.
"I found them and paid in the low 20s at auction," said Thomas, managing partner of Subaru of Plano and Subaru of Dallas. "They called recently and wanted some more. But six months later, that same Suburban is selling for $5,000 more, and I'm having a hard time finding them."
Market adjustments
Some industry experts don't see anything remarkable in the rapid rise of used-truck values and the flattening of small-car values. George Pipas, sales analysis manager at Ford Motor Co., said the fluctuations were expected after automakers cut truck production last year and cranked up car assembly in response to high fuel prices.
"Right now, we're seeing the effects of actions last summer," Pipas said. "Small cars went crazy, and every manufacturer turned up the factories to build as many small cars as they could. They slashed the bejesus out of truck production in the third and fourth quarters."
What's happening now is a market adjustment, he said.
Nonetheless, Sam Pack's Five Star Ford dealerships in Carrollton and North Richland Hills expect their used sales to be down some in February – primarily because the supply of trucks is tight.
Ultimately, that bodes well for new-vehicle sales, said dealership owner Sam Pack.
"At some point, the supply of used vehicles will be an issue, and at that point, you will see new sales pick up," he said.
Six months ago, buyers lined up five deep for the first Prius off a transporter truck. Now, with gas prices about half what they were in July, Priuses are piling up on local lots, their sales down about 35 percent – even with their first incentive ever, a $750 rebate.
That's also true of other formerly strong small cars such as the Honda Civic, Nissan Sentra and Ford Focus, all of which have seen their sales drop 25 percent or more.
"Small cars are dead," said Jerry Reynolds, a former Ford dealer who hosts an auto advice show on Saturdays on WBAP-AM (820) and tracks the local auto industry. "Everybody hits the panic button when gas goes to $4 a gallon. But the first time they can go back to a truck or SUV, they will."
"For a while, anything small with a four-cylinder engine would sell quickly," said Ray Huffines, chief executive of Plano-based Huffines Auto Dealerships, which includes Chevrolet, Dodge, Chrysler, Jeep, Hyundai and Kia outlets. "That's not true now."
Remember all that talk last summer about a profound consumer shift away from trucks and into cars? Today the hottest vehicle at Freeman Toyota in Hurst is a 2- or 3-year-old Tundra pickup.
"We're in Texas, and when gas prices are low, people are going to drive their trucks and SUVs," said Dane Minor, general manager of Freeman Toyota. "If I could get my hands on a hundred 2005-2007 Tundras, I'd buy them. We literally can't get them out of detail before some are sold."
In the Dallas market, pickup trucks and SUVs are the hot rides at wholesale auctions. Two-year-old trucks have increased in cost by $3,000 or more in the last 90 days, dealers say, restoring all of the trade-in value they lost last summer when gas was $4 a gallon. Car values have remained flat at best and in some cases have dropped more than $1,000.
But this surge in truck sales comes with a twist: It's occurring mainly with late-model used trucks as used vehicles become a growing alternative to new cars and trucks. The new-vehicle market nationally remained down 37.1 percent last month.
For now, "it's chic to be cheap," said Brian Huth, general manager of Sam Pack's Five Star Ford in Carrollton. "People are thinking: 'I'm a new car buyer, but I might be better off for now with a used car.' "
Sudden shift
The challenge for most dealers these days is just maintaining a supply of trucks – a dramatic shift from six months ago, when many dealers didn't even want them as trades.
"We're out of new Tundras, and it's very hard to find good used ones," said Pat Lobb, who owns Pat Lobb Toyota and Scion of McKinney. "It comes down to the guy who needs a truck needs a truck. There are no substitutes."
Meanwhile, Lobb and fellow Toyota dealer Minor each have about 60 Priuses on their lots. Both bought extra Priuses that other dealers didn't want, figuring that gas prices might go up this summer and that demand for the hybrid sedans could increase again.
The shift in consumer interest from small, economical cars to much bigger trucks was predictable, following the same pattern as in previous gas price swings, said Jack Nerad, executive market analyst for Kelley Blue Book and kbb.com. When gas prices are low, consumers buy big – even when smaller vehicles might be more practical, he said.
"I liken it to putting consumers in a candy store and encouraging them to eat broccoli," Nerad said. "It won't happen."
The heavy demand for trucks is driving up used prices so fast that the gap is shrinking between the cost of a late-model used truck and a new one. For example, clean year-old Ford F-150 XLT pickups sold in late February at an area auction for an average of $25,100 – nearly $3,000 higher than the truck's estimated value in a recently published used-vehicle price guide.
Last fall, a commercial customer asked David Thomas at Subaru of Plano to get him five late-model, four-wheel-drive Chevrolet Suburbans.
"I found them and paid in the low 20s at auction," said Thomas, managing partner of Subaru of Plano and Subaru of Dallas. "They called recently and wanted some more. But six months later, that same Suburban is selling for $5,000 more, and I'm having a hard time finding them."
Market adjustments
Some industry experts don't see anything remarkable in the rapid rise of used-truck values and the flattening of small-car values. George Pipas, sales analysis manager at Ford Motor Co., said the fluctuations were expected after automakers cut truck production last year and cranked up car assembly in response to high fuel prices.
"Right now, we're seeing the effects of actions last summer," Pipas said. "Small cars went crazy, and every manufacturer turned up the factories to build as many small cars as they could. They slashed the bejesus out of truck production in the third and fourth quarters."
What's happening now is a market adjustment, he said.
Nonetheless, Sam Pack's Five Star Ford dealerships in Carrollton and North Richland Hills expect their used sales to be down some in February – primarily because the supply of trucks is tight.
Ultimately, that bodes well for new-vehicle sales, said dealership owner Sam Pack.
"At some point, the supply of used vehicles will be an issue, and at that point, you will see new sales pick up," he said.
12:08 AM
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