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Light Truck Sales Rebound in September; Toyota Leads the Way

4 October 2006

Ldvsep06
September sales for the top six automakers. Click to enlarge.

US sales of light-duty trucks and SUVs rebounded in September, increasing to 720,092 units—5.4% more than sales in September 2005, according to figures gathered by Autodata. Total light-duty vehicle sales in the US increased 1.9% in September 2006 from September 2005, climbing to 1,354,365 units.

By contrast, sales of passenger cars dropped 1.9% from the prior September to 634,273 units. In September 2006, light trucks accounted for 53% of new light-duty vehicle sales, up from 51% in September 2005. For the nine months through September 2006, light-truck sales were down 8.2% from the prior year, while passenger-car sales were up 1.8%. For the first nine months of 2006, light trucks accounted for 52% of all new light-duty vehicle sales.

GM and Ford still posted month-on-month declines in their light truck sales, but not the sharp decreases of prior months of this year. Ford’s economically important F-Series trucks halted their decline in sales with an increase of 1.2% in September sales to 70,822. (By contrast, total sales of all Ford Brand cars for the month was 72,566. That figure, however, marked a very sharp 43.7% increase from September 2005.)

Likewise, Chevrolet’s full-size pickup sales climbed 11.4% to 58,170 units.

A big boost in truck and SUV sales came from Toyota, whose sales of those vehicles increased 35% to 95,583 units. The increase in Toyota sales accounted for 67% of the total increase in light duty truck sales from September 2005. Sales of the Tundra full-size pickup jumped 67% to 12,609 in September.

Mogas_chart
Price of regular grade gasoline in the US. Click to enlarge. Source: EIA

Honda also saw a sharp climb in light truck sales, with an 11.6% increase to 49,114 units.

By the beginning of October, the average price of gasoline in the US (all grades, all formulations) had dropped to $2.36 per gallon—an 18% drop from the average $2.89 at the end of August 2006 and 21% below the price one year ago.

October 4, 2006 in Fuel Efficiency, Sales | Permalink | Comments (58) | TrackBack (0)

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Comments

Buyers of these light trucks will no doubt complain when gas prices go up again. These sales just demonstrate that we will never do anything serious about fuel consumption until we institute a permanent increase in prices kept up by gas taxes.

No surprise with this news.

I'm sure someone will lash out at Toyota, too, any minute now.

If a car is good enough for your purposes, you should still purchase that rather than an SUV or pick-up truck. Oil prices may be at their lowest since February but a vehicle is operated for a decade or more. It therefore pays to ignore short-term gyrations and look at the underlying long-term trend, which has been firmly upwards in recent years.

It is true that this has sparked fresh investment in oil production and refining capacity, which could yet turn the present boom to a bust. However, robust growth in OECD and BRIC countries, in Eastern Europe as well as in a large number of other emerging economies will ensure that any bust may well be milder and shorter-lived than those in the past. China in particular *could* increase the energy efficiency of virtually all aspects of its economy but won't make that a priority as long as the Communist party perceives rapid GDP growth as essential to its own political survival.

One more thing: don't blame the auto industry for building excessive numbers of SUVs and pick-up trucks if that is what consumers demand. These vehicles also deliver high profit margins, increasing the incentive to produce and market them. After all, Toyota, GM, Ford, DCX and others (are trying to) run for-profit enterprises, not charities. Nevertheless, it is the customer who is king.

If sales of these vehicles increase again, consumers have only themselves to blame. Inevitably, this will contribute to yet greater dependence on OPEC oil, higher GHG emissions and higher prices at the pump. Coincidentally, it may help the US auto industry stay afloat in the short term. However, for the long term health of US energy security, the global climate as well as the US auto industry, high fuel economy should remain a top purchasing criterion for prospective carbuyers.

Hooray for the free market showing that consumers will make a sensible choice...oh, nevermind.

I'm expecting Carlos Ghosn and Bob Lutz to put out a statement that says, "See I told you so. Purchasers of SUVs don't care about gas price volatility."

I'd love to see oil at $30 per barrel or less and gasoline at $3 per gallon in the US. Then we could stop funneling billions of dollars into the countries whom despise us most while convincing consumers to make more sensible vehicle choices addressing environmental and security concerns at the same time.


The focus should be making the PU/SUV get 40mpg and run on a renewable fuel source. Not, forcing people to buy small cars that don't match their needs.

I knew the general population was short-sighted, but this really blows my mind. Gas is down for a month or so and the truck sales "boom" again. Well, I'm not going to feel sorry for them when/if gas is $4.00 a gallon in two years. Now's a good time to snatch up the fuel efficient vehicles and sell them for a profit in two years (if gas is much higher then).

Perhaps now that GM and Ford have cut labor costs and excess capacity, they can reliably build Class B and C cars for a profit (Subcompact and compact cars).
_
Rafael Seidl,
While it is true that what the customer demands drives the market, GM should have leveraged their European and other overseas operations to hedge against the rising energy prices. Even if the fuel prices had not risen, there are advantages that would have resulted from such decisions, such as better ability to hold off Asian imports in the N.A. market. The same would be true, though to a smaller degree, for Ford.
_The Big 3 were tunnel visioned with high margin light trucks and SUV. This was in part due to the strategy to let the Japanese take the lower margin market for small and efficient cars. They would put up a fight in the large, performance, and luxury car segments, but the big profits would roll in from SUV and light trucks. A good strategy always has a good backup plan, or at least the beginnings for a rapid repositioning of their company (as rapid massive companies like GM can move). They did not hedge, and thus they took a punch in the solar plexus when gas prices rose above $2.50, then above $3.00. The upper management of the bureaucracy that is GM is also risk adverse, and WILL NOT DO ANYTHING THAT HAS ANY RISK OF DAMAGING THEIR RISE UP THE CORPRATE LADDER. The results were mediocre designs, and less emphasis on fuel efficiency. Some of hierarchy got the message after Katrina in 2005, but how carefully did they listen, and how fast can they turn it around is not likely to be clear until 2007. We have seen some of the renewed urgency amongst the Big 3 this year. However, these were in the pipeline for some time (3-6 years). Hence, real results may not appear until 2008, possibly even not fully unveiled until beyond 2010.
_Will they become smaller, but leaner and more profitable, of will the carmakers from Asia eat their lunch? It will be an interesting 5 years as we watch GM and Ford fight for their lives. DaimlerChrysler might join them as well, if Dr. Z does not help Chrysler around with technology they can draw from in their European operations/subsidiaries. How will they continue to weather their dropping market share, remains to be seen.

1. Eliminate the Gas Guzzler Tax EXEMPTION light trucks and minivans below 22.5 mpg enjoy.
2. Eliminate the policy that allows businesses to purchase SUVs and write off most or all of the cost of the vehicle on their income taxes in the first year.

"The focus should be making the PU/SUV get 40mpg and run on a renewable fuel source. Not, forcing people to buy small cars that don't match their needs."

Probably 5% of light truck buyers have a true need for one - and that's being generous.

Why not get a fuel efficient Pick-up like a Ford Ranger or Toyota Tacoma? And why not a more fuel efficient SUV (that's not an oxymoron) like a Jeep Patriot, Jeep Compass, or Ford Escape Hybrid?

"Probably 5% of light truck buyers have a true need for one - and that's being generous."

-------------
No, thats not being generous. Since far more then 20% of them are used for work/business that does not fly. Half the truck owners I know use them for work, and all of the pickup owners I know use them for hauling wood or towing.
I only know one SUV owner who does not use his SUV for anything specific. The only common thread.... almost all of them have BIGGER light trucks then they probobly need.

SUV or a pick-up are real pig to drive. Only people who really need them should sacrifice agility and economy of a car to these cast iron mammoths. Unfortunately, very few among American drivers are good enough to recognize this difference. This is exactly the reason why they tolerate antiquated technology, awful reliability, inherent poor safety of these vehicles, and generally drive them on even more retarded manner then these vehicles allow.

But this situation is not forever. People learn. Move to way more sophisticated import SUV and trucks indicates just that.

Since far more then 20% of them are used for work/business that does not fly. Half the truck owners I know use them for work, and all of the pickup owners I know use them for hauling wood or towing. I only know one SUV owner who does not use his SUV for anything specific. The only common thread.... almost all of them have BIGGER light trucks then they probobly need.

Anecdotal fallacy.


Barnaby wrote: "Anecdotal fallacy."

-----------------------
Ok, so that "far more then 20%" was off the top of my head.
according to the DOE its...
"Of total light truck sales to fleets, 56.8 percent are used in business fleets"

source:
http://www.eia.doe.gov/oiaf/aeo/assumption/transportation.html

Which makes your 5% guess the fallacy.

Which makes your 5% guess the fallacy.

Are you kidding? What exactly do you think your statistic is supposed to indicate? Percentage of light truck sales to fleets are sold to businesses? And? That doesn't say what percentage of light truck sales are fleet sales, nor how those light trucks are used in business fleets.

In sum, your statistic means nothing.

The question is the NEED for a light truck, and what percentage of the ones sold are actually because they're needed.

"Of total light truck sales to fleets, 56.8 percent are used in business fleets"
That is not a hard statement to understand. The trucks are used by businesses, and used by them. I have not seen a business buy a truck and not use it for work. That may be possible but its not the norm.

PS- its not my statistic, its the DOE's statistic.

PS- its not my statistic, its the DOE's statistic.

Gee, I didn't realize that. Are we going to have a semantic showdown?

How about "THAT statistic is meaningless." Does that work for you?

PS - It's actually ORNL's statistic, which they originally source from the Automotive Fleet Factbook if you want to get hypertechnical about it.

The people I know with big pickup trucks (full size dodge ram, etc) use them for towing or hauling maybe 6-7 times a year at the most and some never use them in that capacity unless someone asks to use their truck when they move.

The people I know with SUVs (car-based or truck-based) never tow or haul anything other than themselves with one person who is an exception because they tow a boat to the lake 5 or 6 times a year.

A guy I work with uses his little sub-compact hatchback when he goes hunting. He loads a Bear right into the hatch area with the dogs up front or in the backseat and he says he's never had a need for a pickup when he goes hunting.

Go to the dept. of revenue listings for every state and they typically list car registrations by classification. Then you can find out how many trucks are registered by businesses or for commercial use and how many are registered for personal use. I'm not about to go to such great lengths though as I just finished doing that for something else.

Barnaby,

I have to say, I think that you have been completely outclassed by hampden wireless’ logic. I mean you quoted a reliably statistic that then requires an additional inference to understand that more than 5% of light truck users actually use these vehicles for there intended purposes. However, Hampden has rallied around a figure that has no basis and was pulled directly out of fyi co2’s rear. Yep Hampden really got you on this one.

bret

I have to say, I think that you have been completely outclassed by hampden wireless’ logic.

Oh, absolutely. What's more logical than to look up percentage of light truck fleet sales to business when the topic is how much light trucks are actually needed? And the great logic of quibbling over petty, non-topical semantics is also very logical and indicative of a strong argument. You're so right, Bret.

I mean you quoted a reliably [sic] statistic that then requires an additional inference to understand that more than 5% of light truck users actually use these vehicles for there [sic] intended purposes.

There's some more iron-clad logic.

However, Hampden has rallied around a figure that has no basis and was pulled directly out of fyi co2’s rear.

One accurate statement after another from you, Bret. I'm the one who threw that number out, not fyico2. Nice butt reference, too - another sign of an iron-clad, logical argument.

Yep Hampden really got you on this one.

Oh, did "he"?

I'll refer you now to the 2002 Vehicle Inventory and Use Survey.

http://www.census.gov/prod/ec02/ec02tv-us.pdf

This will require you to think a little bit, so don't be scared.

Go to page 57 of the report and you'll see a chart entitled "Truck Miles Distribution by Operational Characteristics". Since the data in Column B excludes pickups, minivans, other light vans, and sport utilities, simply subtract the amount from Column B from the total for all trucks in Column A to get the amount for light trucks.

Next you'll want to look at two rows - one entitled "No trailer pulled" in the section on "TRAILER CONFIGURATION" and the other "Off the road" in the section on "RANGE OF OPERATION".

This is what you'll find.

Total miles = 969,555,500,000
No trailer pulled = 935,846,100,000
Ergo, trailer pulled = 33,709,400,000, or 3.5% of total miles
Off the road = 12,401,400,000, or 1.3% of total miles

Assuming there's no overlap between those two uses (ie, towing and off-roading simultaneously), you get this:

Trailer pulling + off-roading = 3.5% + 1.3% = 4.8%

Wow. Looks like what I "pulled out of my rear" came really darn close to what the actual numbers are.

Yeah, that Hampden sure crushed me with his "logic".

Thanks for your comments, Bret.

Another common argument for light trucks is people carrying capacity.

Fact is that the personal light truck load factor is 1.72 persons per vehicle, and that 7-or-more person households are only 1.8% of all households.

barnaby,

I'd add 6 person and 7 or more person households. Other than vans (small market share) I don't know of any passenger vehicles which will hold more than 5 people. Granted that is still a small percentage (4.3%)

4.8% for trailer and off-road use (following your assumptions) doesn't quite clarify the entirety of actual need for a truck. Really you should go down the list of products transported and subtract B from A. It comes out to something like 189,345,800,000 miles and using the above 969,555,500,000 miles figure from above that gives roughly 19.5% of the light duty truck miles are from transporting goods (hazardous and non-hazardous). I could have fumbled through a few numbers as I did it quickly and there are a lot of numbers there but that should be fairly accurate.

Well, the number is probably smaller than that since multiple products could be carried at the same time but they still add the miles individually by product type (according to footnote 4).

That puts it at somewhere definitely less than 19.5% of the miles and above 4.8% of the miles are used for commercial or business purposes.

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