Truck prices collapsing get a cheap tow vehicle now.
05-20-2008, 06:26 PM
#1
Team Owner
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Truck prices collapsing get a cheap tow vehicle now.
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Used truck price drop hurts new pickups
As trade-in values fall, new model launches in jeopardy
Bryce G. Hoffman / The Detroit News
Rising fuel prices and a collapsing housing industry have sent used truck prices into a nosedive that could threaten the launches of the new Ford F-150 and Dodge Ram pickups.
The same market forces have been eroding new pickup sales for a couple of years, and the accelerating decline in used pickup prices is putting additional pressure on a vehicle segment already under stress.
Used pickup prices plummeted nearly 13 percent year over year in April, according to Manheim Consulting, which tracks used vehicle sales across the United States. It was the biggest drop on record. Prices for full-size light-duty pickups dropped nearly 16 percent, but the real shock came in the full-size heavy-duty segment, where prices fell almost 20 percent.
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"This represents a significant threat to this summer's Dodge Ram and Ford F-150 new vehicle launches," said analyst Peter Nesvold of Bear Stearns. "Consumers will be less able to use their current used vehicle as currency to lower their monthly payments on a new purchase; and the new vehicles will be less price competitive on the market compared with used."
The credit crunch only compounds the problem. More customers will find themselves owing more on their old trucks than they are worth. In the past, lenders were more than happy to roll the difference over into a new loan, but not in today's tight credit market.
Other big vehicles are also under pressure. Prices for used sport utility vehicles were down 11 percent last month. In fact, the only segment to show an increase was compact cars, which were up 2 percent year over year as shoppers seek out more fuel-efficient models. Overall, used vehicle prices rose in April for the first time in six months on a month-to-month basis, but were still down 5 percent compared with April a year ago, according to Manheim.
Tom Webb, chief economist for the consulting firm, said he expects overall used vehicle prices to be flat this year, but he expects truck prices to remain down for the foreseeable future.
"The prices might be bottoming out, but we certainly don't see a significant rebound," he said.
Analyst Brian Johnson of Lehman Brothers said Ford Motor Co. and Chrysler LLC already face a real challenge trying to sell this year's models to consumers who know new trucks are on the way, particularly as consumer tastes are shifting away from big pickups. Declining used truck values only make that sales job harder.
"This trend is likely to negatively impact Ford and Dodge's sell-down of existing models before the launch of their new full-size pickups in the second half of 2008," Johnson said in a research note. "Once the new models are introduced, the pressure on pricing may limit the boost to both (automakers)."
He added that suppliers may also suffer as a result.
Many dealers also are concerned.
"The used truck business, right now, is absolutely in a free fall," said Kent Ritchey, who owns both a Dodge and a Ford dealership in Memphis. "It's unfortunate that the new trucks are coming to the market in these trying times."
Dealers in southeast Michigan are less concerned because so much of their business comes from lease customers, who do not have to worry about the price of a trade-in. Most of their customers also benefit from employee or friends-and-family discounts. But even locally, high fuel prices have consumers looking at less gas-thirsty options.
"Our (truck) volumes have certainly deteriorated with fuel prices where they are," said George Gorno Jr. of Gorno Brothers Ford in Woodhaven.
But analysts say this decline threatens to undermine residual values for the new trucks, which translates into higher payments for customers who lease.
Dealers are looking to the automakers to provide a solution in the form of incentive programs when the new pickups launch later this summer.
"It will take some creative financing, and it will take some factory assistance," Ritchey said.
Chrysler understands that and is working on a solution. Dodge marketing director Mike Accavitti is confident that consumers will be attracted to the company's new truck on its merits, but acknowledged that Chrysler will have to do something to help them get over the shock of their trade-in value.
"We're not naïve enough to think we can just sit back and rest on the laurels of this truck," he said. "We're going to do what we need to do to make sure these customers can drive off in a new truck."
Accavitti would not discuss the details of Chrysler's incentive plan for competitive reasons.
Ford spokesman Jim Cain would not comment on the company's marketing plans for the new F-150, saying only that "the best way to maintain high resale value is to offer the customer more choice, more capability and more smart technology."
This is one battle Ford cannot afford to lose, analyst Nesvold said. The pickup is too important to the automaker's bottom line.
His concerns about the coming launch prompted him to downgrade Ford's stock last month, despite the surprise $100 million profit the company posted for the first quarter.
"As goes the F-150," he said, "so goes Ford stock."
You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.
Save Google Yahoo Newsvine Reddit StumbleUpon
Share del.icio.us Digg Furl Fark Simpy Facebook Monday, May 19, 2008
Used truck price drop hurts new pickups
As trade-in values fall, new model launches in jeopardy
Bryce G. Hoffman / The Detroit News
Rising fuel prices and a collapsing housing industry have sent used truck prices into a nosedive that could threaten the launches of the new Ford F-150 and Dodge Ram pickups.
The same market forces have been eroding new pickup sales for a couple of years, and the accelerating decline in used pickup prices is putting additional pressure on a vehicle segment already under stress.
Used pickup prices plummeted nearly 13 percent year over year in April, according to Manheim Consulting, which tracks used vehicle sales across the United States. It was the biggest drop on record. Prices for full-size light-duty pickups dropped nearly 16 percent, but the real shock came in the full-size heavy-duty segment, where prices fell almost 20 percent.
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"This represents a significant threat to this summer's Dodge Ram and Ford F-150 new vehicle launches," said analyst Peter Nesvold of Bear Stearns. "Consumers will be less able to use their current used vehicle as currency to lower their monthly payments on a new purchase; and the new vehicles will be less price competitive on the market compared with used."
The credit crunch only compounds the problem. More customers will find themselves owing more on their old trucks than they are worth. In the past, lenders were more than happy to roll the difference over into a new loan, but not in today's tight credit market.
Other big vehicles are also under pressure. Prices for used sport utility vehicles were down 11 percent last month. In fact, the only segment to show an increase was compact cars, which were up 2 percent year over year as shoppers seek out more fuel-efficient models. Overall, used vehicle prices rose in April for the first time in six months on a month-to-month basis, but were still down 5 percent compared with April a year ago, according to Manheim.
Tom Webb, chief economist for the consulting firm, said he expects overall used vehicle prices to be flat this year, but he expects truck prices to remain down for the foreseeable future.
"The prices might be bottoming out, but we certainly don't see a significant rebound," he said.
Analyst Brian Johnson of Lehman Brothers said Ford Motor Co. and Chrysler LLC already face a real challenge trying to sell this year's models to consumers who know new trucks are on the way, particularly as consumer tastes are shifting away from big pickups. Declining used truck values only make that sales job harder.
"This trend is likely to negatively impact Ford and Dodge's sell-down of existing models before the launch of their new full-size pickups in the second half of 2008," Johnson said in a research note. "Once the new models are introduced, the pressure on pricing may limit the boost to both (automakers)."
He added that suppliers may also suffer as a result.
Many dealers also are concerned.
"The used truck business, right now, is absolutely in a free fall," said Kent Ritchey, who owns both a Dodge and a Ford dealership in Memphis. "It's unfortunate that the new trucks are coming to the market in these trying times."
Dealers in southeast Michigan are less concerned because so much of their business comes from lease customers, who do not have to worry about the price of a trade-in. Most of their customers also benefit from employee or friends-and-family discounts. But even locally, high fuel prices have consumers looking at less gas-thirsty options.
"Our (truck) volumes have certainly deteriorated with fuel prices where they are," said George Gorno Jr. of Gorno Brothers Ford in Woodhaven.
But analysts say this decline threatens to undermine residual values for the new trucks, which translates into higher payments for customers who lease.
Dealers are looking to the automakers to provide a solution in the form of incentive programs when the new pickups launch later this summer.
"It will take some creative financing, and it will take some factory assistance," Ritchey said.
Chrysler understands that and is working on a solution. Dodge marketing director Mike Accavitti is confident that consumers will be attracted to the company's new truck on its merits, but acknowledged that Chrysler will have to do something to help them get over the shock of their trade-in value.
"We're not naïve enough to think we can just sit back and rest on the laurels of this truck," he said. "We're going to do what we need to do to make sure these customers can drive off in a new truck."
Accavitti would not discuss the details of Chrysler's incentive plan for competitive reasons.
Ford spokesman Jim Cain would not comment on the company's marketing plans for the new F-150, saying only that "the best way to maintain high resale value is to offer the customer more choice, more capability and more smart technology."
This is one battle Ford cannot afford to lose, analyst Nesvold said. The pickup is too important to the automaker's bottom line.
His concerns about the coming launch prompted him to downgrade Ford's stock last month, despite the surprise $100 million profit the company posted for the first quarter.
"As goes the F-150," he said, "so goes Ford stock."
You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.
05-21-2008, 12:10 PM
#3
Melting Slicks
Member Since: Sep 2006
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Don't worry, Ford will soon be announcing the "new" Mustang II to help fight against gas guzzlers. While Chevy has announced a new sports car to replace the Camaro and Corvette in 2010 called the "Vegan." It will be the same body style as the Vega, but only runs on corn based ethanol.
Dodge is also starting up their "moth-balled" K-car assembly plant.
Let's see, will Obama be the next Jimmy Carter?
Dodge is also starting up their "moth-balled" K-car assembly plant.
Let's see, will Obama be the next Jimmy Carter?
05-21-2008, 04:41 PM
#4
Drifting
Politics in a thread about tow vehicles? Troll, troll, go away... Troll again some other day...
I'm going to take advantage. It seems to me a bio-diesel powered two vehicle might be in my future. If I save some dough on fuel, it'll go for tires and race gas and brake pads!
I'm going to take advantage. It seems to me a bio-diesel powered two vehicle might be in my future. If I save some dough on fuel, it'll go for tires and race gas and brake pads!
05-21-2008, 07:02 PM
#6
Melting Slicks
Member Since: Sep 2006
Location: Beaverton OR
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Politics in a thread about tow vehicles? Troll, troll, go away... Troll again some other day...
I'm going to take advantage. It seems to me a bio-diesel powered two vehicle might be in my future. If I save some dough on fuel, it'll go for tires and race gas and brake pads!
I'm going to take advantage. It seems to me a bio-diesel powered two vehicle might be in my future. If I save some dough on fuel, it'll go for tires and race gas and brake pads!
Nor do you appear to have a sense of humor...
I bought my new tow vehicle last month. Prices and interest rates are great!
05-21-2008, 07:41 PM
#7
Team Owner
For somebody who needs (or just wants) a truck for towing or hauling, this is a great time to be looking and buying. It might be difficult to unload a truck that you currently have , but dealers are selling new trucks for cheap.
I would like to have a new pickup, but my 99 Silverado only has 74K miles on it; it runs great and does exactly what I want it to do.
For some, the price of gas or diesel is not going to be an issue if they require a pickup. I can't haul my trailer and track car with a 40mpg sub-compact.
And companies that have a need for trucks in their business are not going to swap a 3/4 ton pickup for a Prius if they have to haul equipment around.
I would like to have a new pickup, but my 99 Silverado only has 74K miles on it; it runs great and does exactly what I want it to do.
For some, the price of gas or diesel is not going to be an issue if they require a pickup. I can't haul my trailer and track car with a 40mpg sub-compact.
And companies that have a need for trucks in their business are not going to swap a 3/4 ton pickup for a Prius if they have to haul equipment around.
05-22-2008, 08:37 AM
#8
Melting Slicks
For me, the need is just for a tow vehicle. I have been scouring commercial boards (i.e. ads) for a low mileage, 3-4 year old truck/SUV (with obscenely large engines, 6.0l gasoline minimum; 8.1l or V10 preferred 
) for under $10k, hopefully more like $5k. And, yes, I have made at least one very-low-ball offer on an Escalade . Actually, the time is not ripe just yet, I predict it will be in about 3-6 months *IF* the fuel prices stay this high or going higher (likely).
I have my eyes on a few GM trucks/SUVs with Quadrasteer. Let's see how desperate these owners/dealers in several months when nobody even give them an offer on their ultra gas guzzler. I have noticed a substantial increase in used truck/SUV market which will "crash" the market (excessive amount of vehicles offered, no buyer).
I'm very patiently waiting
) for under $10k, hopefully more like $5k. And, yes, I have made at least one very-low-ball offer on an Escalade . Actually, the time is not ripe just yet, I predict it will be in about 3-6 months *IF* the fuel prices stay this high or going higher (likely).I have my eyes on a few GM trucks/SUVs with Quadrasteer. Let's see how desperate these owners/dealers in several months when nobody even give them an offer on their ultra gas guzzler. I have noticed a substantial increase in used truck/SUV market which will "crash" the market (excessive amount of vehicles offered, no buyer).
I'm very patiently waiting
05-22-2008, 09:49 AM
#9
Former Vendor
For me, the need is just for a tow vehicle. I have been scouring commercial boards (i.e. ads) for a low mileage, 3-4 year old truck/SUV (with obscenely large engines, 6.0l gasoline minimum; 8.1l or V10 preferred ) for under $10k, hopefully more like $5k. And, yes, I have made at least one very-low-ball offer on an Escalade . Actually, the time is not ripe just yet, I predict it will be in about 3-6 months *IF* the fuel prices stay this high or going higher (likely).
I have my eyes on a few GM trucks/SUVs with Quadrasteer. Let's see how desperate these owners/dealers in several months when nobody even give them an offer on their ultra gas guzzler. I have noticed a substantial increase in used truck/SUV market which will "crash" the market (excessive amount of vehicles offered, no buyer).
I'm very patiently waiting
) for under $10k, hopefully more like $5k. And, yes, I have made at least one very-low-ball offer on an Escalade . Actually, the time is not ripe just yet, I predict it will be in about 3-6 months *IF* the fuel prices stay this high or going higher (likely).I have my eyes on a few GM trucks/SUVs with Quadrasteer. Let's see how desperate these owners/dealers in several months when nobody even give them an offer on their ultra gas guzzler. I have noticed a substantial increase in used truck/SUV market which will "crash" the market (excessive amount of vehicles offered, no buyer).
I'm very patiently waiting
Please do yourself a favor and don't buy the all wheel steer. Look at history, and what GM, Mistbisi (don't care to spell that company right
) Honda, and all the other that have tried all wheel steer. Randy
05-22-2008, 09:55 AM
#10
Melting Slicks
From what I have heard/read, the quadrasteer does add weight (and complexity for sure) in exchange of better trailer control and shorter turning radius (at low speed). I won't hope for/use AWS on a race car but for a tow vehicle it's a good idea. Besides, it has a failsafe that put the rear wheels straight (the quadrasteer can also be turned off by pushing a button).
05-22-2008, 10:15 AM
#11
Race Director
Member Since: Oct 2000
Location: Deal's Gap 2004 NCM Motorsports track supporter
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My few months old (NS) Duramax just pulled in 19.2 MPG at 67 mph on interstate. With trailer at 67mph, 13.2. Things to consider.....
05-22-2008, 10:29 AM
#12
Le Mans Master
I bought an '07 Sierra 2500 HD Duramax last August and love it for towing. Pulling a fully loaded 24' enclosed, nothing comes close to a diesel. Yep, fuel is expensive, but as a partner of mine says, "it costs money to drink liquor and ride the train."
The paddock was fuller than I've ever seen it at Roebling last weekend. Toter Homes, motor homes, diesels and everything in between. I was amazed since I thought the fuel prices would drop attendance. Didn't seem to bother most folks, or at least enough to make them stay home.
If I were in the market for a diesel, now would be a golden opportunity to get one.
On the note of high fuel prices, here's more anecdotal observations. I live on the lake here at the opulent, yet understated, Big Pine Key Trailer and Adult Theme Park, and watching all the boat traffic makes me wonder if many people are really bothered with high fuel prices. Traffic might be down a little, but not much and the summer hasn't even started.
The paddock was fuller than I've ever seen it at Roebling last weekend. Toter Homes, motor homes, diesels and everything in between. I was amazed since I thought the fuel prices would drop attendance. Didn't seem to bother most folks, or at least enough to make them stay home.
If I were in the market for a diesel, now would be a golden opportunity to get one.
On the note of high fuel prices, here's more anecdotal observations. I live on the lake here at the opulent, yet understated, Big Pine Key Trailer and Adult Theme Park, and watching all the boat traffic makes me wonder if many people are really bothered with high fuel prices. Traffic might be down a little, but not much and the summer hasn't even started.
05-22-2008, 11:08 AM
#13
Former Vendor
Apart from GM, Mitsubishi and Honda have AWS on their passenger cars, not a truck/SUV. What's wrong with AWS in truck/SUV application, care to elaborate ? Is it reliability ? Or, design flaws ? Please enlighten me.
From what I have heard/read, the quadrasteer does add weight (and complexity for sure) in exchange of better trailer control and shorter turning radius (at low speed). I won't hope for/use AWS on a race car but for a tow vehicle it's a good idea. Besides, it has a failsafe that put the rear wheels straight (the quadrasteer can also be turned off by pushing a button).
From what I have heard/read, the quadrasteer does add weight (and complexity for sure) in exchange of better trailer control and shorter turning radius (at low speed). I won't hope for/use AWS on a race car but for a tow vehicle it's a good idea. Besides, it has a failsafe that put the rear wheels straight (the quadrasteer can also be turned off by pushing a button).
Randy
05-22-2008, 12:01 PM
#14
Drifting
Nope, no sense of humor about politics. Not after the last few years.
05-22-2008, 02:17 PM
#15
Burning Brakes
On the note of high fuel prices, here's more anecdotal observations. I live on the lake here at the opulent, yet understated, Big Pine Key Trailer and Adult Theme Park, and watching all the boat traffic makes me wonder if many people are really bothered with high fuel prices. Traffic might be down a little, but not much and the summer hasn't even started.
The people that have money will not be affected. They can afford to pay fuel on a luxury boat or sports car. It's the average Joe who will be hurt by high fuel costs. He will find a way to cut money someplace else so he doesn't have to give up his vacation or his hobby. I know several people have been cutting back or simply stopped their 2 Latte a day habit from Starbucks and other non essential items.
05-22-2008, 03:11 PM
#16
Drifting
The people that have money will not be affected. They can afford to pay fuel on a luxury boat or sports car. It's the average Joe who will be hurt by high fuel costs. He will find a way to cut money someplace else so he doesn't have to give up his vacation or his hobby. I know several people have been cutting back or simply stopped their 2 Latte a day habit from Starbucks and other non essential items.
Was it Nascar that stopped running back in the 70s because of the fuel shortage? That was a huge publicity stunt, seems to me. The fuel burned in a weekend on a stock car race is very small compared to the fuel the crowd burns to get there. I would think.
It's a crappy time for gasoline engines. I certainly didn't want to see this come to pass in my lifetime.
05-22-2008, 04:41 PM
#18
Team Owner
Thread Starter
The people that have money will not be affected. They can afford to pay fuel on a luxury boat or sports car. It's the average Joe who will be hurt by high fuel costs. He will find a way to cut money someplace else so he doesn't have to give up his vacation or his hobby. I know several people have been cutting back or simply stopped their 2 Latte a day habit from Starbucks and other non essential items.
05-22-2008, 04:59 PM
#19
Former Vendor
05-22-2008, 05:00 PM
#20
Former Vendor
Randy