'Small' Could be the New 'Big' of the Pickup Market
By Michelle Krebs September 3, 2009Maybe America's love affair with pickup trucks isn't over. It's just getting smaller.
In both size and volume.
The recently ended federal Cash for Clunkers incentive was a giant boost for fuel-efficient cars. They dominated the top 10 list of new vehicles purchased by those trading clunkers. But if August sales reports are any indicator, more than a few of those Cash for Clunkers vouchers were used to buy midsize (formerly "compact") pickups.
Prior to Cash for Clunkers, the midsize pickup segment had been performing broadly the same as everything else in the worst auto sales market in two decades. But midsize pickups at least had been resistant to the disproportionate toll the economy and shifting consumer tastes were wreaking on fullsize pickups.
Now, the Cash for Clunkers phenomenon may have sharpened the focus an industry trend numerous analysts have speculated was underway: consumers are going "small" - or at least not as gigantic as before.
And in the four weeks that that Cash for Clunkers turned the market into something of a Petri-dish experiment for what's really important to buyers, the strong performance of midsize pickups may indicate there's still interest in trucks - just not for the supersized kind.
Outpacing The Big Boys
Midsize pickups are far from out of the woods.
They had been lagging long before the economic downturn started last summer, about the same time that $4-a-gallon gasoline also started to pound the nails into the coffins of pickups and body-on-frame SUVs. And even without the high-priced gasoline that finally seemed to awaken Americans' dormant environmental instincts, the sour economy's decimation of the homebuilding industry was certain to wallop the pickup segment.
And there's another reason midsize pickups had fallen off the charts: most are perceptibly old and creaky. Many automakers had let the development of midsizers languish as buyers in the overheated market gravitated to the size, amenities - and relative cheapness - of their fullsize counterparts.
But that was then. The new rules of the market and consumer preference seem to favor midsize pickups for many of the same attributes Cash for Clunkers reinforced: midsize pickups get better fuel economy. They're cheaper. And they won't look as large to the neighbors - or the household budget.
Smaller Is Better - Maybe From Now On
August sales numbers were heavily influenced by more than three weeks worth of Cash for Clunkers transactions. Midsize pickups scored big.
The most startling example may be at Toyota Motor Corp. In August, the Tacoma midsize pickup handily outsold the Tundra fullsizer. Score: Tacoma 12,547 and a 5-percent gain over last August; Tundra: 7,872 sales and a 53-percent plunge compared with last year.
And overall, the Tacoma has pulled well ahead of the Tundra year-to-date: Tacoma posted 78,260 sales thru August for a 26.9-percent decline, versus the Tundra's 50,291 units and gaudy 52.7-percent year-to-date slide.
Over at Ford, the Ranger can't hold a candle to the powerhouse F-Series' volume, but the tale is similar. Whatever effect Cash for Clunkers may have had in Ford showrooms (Ford cars were program favorites), it certainly didn't hurt the Ranger: sales for the month ballooned 57.4 percent. Meanwhile, the fullsize F-Series also gained - but just 12.8 percent.
And again, August's hyper-concentrated buyer behavior seems to have simply emphasized what was already happening. Year-to-date, the hoary Ranger (it hasn't substantively changed since 1998) is outperforming the brand-new F-Series; Ranger sales are down 17.8 percent, the F-Series is off by 27.3 percent. Ford announced in August it will boost production of the Ranger in the fourth quarter because inventories are running so low.
Not much different at General Motors Co. Chevrolet's Colorado was up 12.7 percent in 
August, the fullsize Silverado plunged 41.9 percent. For the year, Chevy's midsize and fullsize pickups' sales performance is virtually identical: the Colorado is off by 38.6 percent, the Silverado is down 34.4 percent.
At the GMC division - a much smaller sample - the effect was pronounced. GMC's Canyon midsize pickup enjoyed a healthy 34.9-percent gain in August and is off 28.4 percent for the year. The fullsize Sierra pickup was hammered to a 42.6-percent decline in the Month-of-Clunkers and is down 37.3 percent year-to-date.
For Nissan Motor Co. Ltd., the fading Titan is in full eclipse by the midsize Frontier. The Nissan midsizer didn't enjoy a great month (off 57.6 percent) in August, but the Titan was decimated by a 73.9-percent dive. The year-to-date performance of the two trucks is closer (Frontier is down 51.8 percent, Titan is down 56.3 percent), but Frontier volume is exceeding the Titan by more than 50 percent - and in August, Frontier more than doubled Titan sales.
Only at Chrysler is the pattern partially obscured. The Dodge Ram (-30 percent) couldn't match the midsize Dakota (-1 percent) in August - but the Ram outsold Dakota 17-to-1. And for the year, Ram's relatively strong 26-percent decline is much better than the Dakota's ugly 60-percent slide.
Smaller Pie, Period
There are variables, of course, that make the sales-performance data a broad generalization. The Cash for Clunkers program was structured to attract buyers that could be assumed not particularly predisposed towards fullsize pickups, but according to data from Edmunds.com, two fullsizers, the Ford F-150 and Chevy Silverado, were among the top 20 new models purchased by clunker traders. No midsize pickup was in the top 20 list.
Early on, many analysts mentioned the Cash for Clunkers structure made it easy for those trading in a fullsize truck to buy a new fullsizer and obtain the maximum rebate.
And varying levels of incentives certainly could be a factor. Indeed, as a percentage of average sticker price, compact trucks averaged the highest incentives in August at 11.4 percent, according to Edmunds.com's analysis. Automakers likely could have gotten away with doling out far less for these trucks because they proved to be such a popular selection with clunker traders.
At any rate, Cash for Clunkers created a spurt that intrigued the industry for a month, but won't do much to change the full-year Seasonally Adjusted Annualized Rate. The U.S. auto market still is going to be lousy this year - and likely next year, too.
The industry's big adjustment is the painful one still underway: pickup volumes, recently the engine of the industry, are down drastically. Now to be determined is whether the fullsize segment can - or will - ever rebound to the volumes of its glory era, and whether a downsizing mindset truly will reshape the pickup market. -- Bill Visnic
Photos by Manufacturers
1 - Toyota Tacoma
2 - Ford Ranger
3 - GMC Canyon
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Until gas goes to $5 a gallon again, buyers will not change their ways.
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