Even though the payment would increase by $80 per month, Adam Lem had little trouble deciding to upgrade his pickup truck. In January, the paramedic from Santa Clarita, Calif. turned in his 2015 Toyota Tundra Limited with one year remaining on its lease, and took home a 2017 Tundra Platinum.
“I moved up to the Platinum for the better interior, the heated seats and all the safety features I didn’t have with my other truck,” Lem said. “With all of the safety you’re getting and the luxury items, it kind of pays for itself.”
He isn’t alone in trading up for a more loaded truck. In 2012, buyers of full-size pickups like the Tundra or Ford F-150 paid an average of $32,444 after accounting for sales incentives and taxes, according to market research firm J.D. Power. By the end of 2016, that figure had risen more than 20 percent, to $39,125.
Rising prices are not stopping buyers from flocking to pickup trucks. Sales of full-size pickups rose by 4.1 percent in January compared with the same month a year earlier, according to Autodata Corp. On Wednesday, automakers reported sales of 1.1 million vehicles of all types last month, a 1.8 percent decline from January 2016.
Sales across the entire light trucks segment – which includes pickups, crossovers and SUVs – grew by 5.7 percent from the year-ago month, and accounted for 62.6 percent of total industry sales. That’s an even higher figure than the 60 percent share that light trucks captured in 2016, up from 55 percent in 2015.
“There’s been a very significant shift away from cars toward trucks and SUVs,” said Thomas King, vice president of PIN OEM Operations, Media & Marketing at J.D. Power. “It’s a very smart thing for manufacturers to say, ‘We’ve got customers who want a super-premium product, they’re willing to pay for it, so let’s provide it.’”
Average transaction prices of other vehicles in the light trucks category saw double-digit gains from 2012 to 2016, too. Midsized SUVs grew by 10.6 percent to nearly $35,000, and large SUVs were up 22.9 percent to nearly $58,000.
Meanwhile, the average transaction price of passenger cars mainly remained flat. Midsized sedans such as family cars like the Toyota Camry and Honda Accord, a fiercely competitive segment in recent years, actually declined by 1.2 percent, to $21,951. Compact cars fell 5.2 percent, to $18,648.
The rising price of light trucks lifted the average cost of all vehicles. From 2012 to 2016, the average transaction price in all segments rose by 9.0 percent, from $28,585 to $31,158.
Part of the reason for the rise in light truck prices is that those vehicles now offer more technology and luxury features than they have in the past.
“It makes the vehicle more palatable for our daily lifestyle,” said Eric Lyman, vice president of industry insights for auto price forecasting firm ALG.
Improvements such as car-like suspension and ride quality, blind spot monitoring and surround view cameras that have become regular features, Lyman said.
“The technology now that’s present make these vehicles feel and operate smaller than their actual size,” he said.
Consumers are finding that new light trucks are vastly improved over the 6 to 10-year old vehicles they may be trading in, King said. As the product has improved, automakers have increased the prices of their trucks and even added new premium trim levels.
In 2012, the highest starting price for a Ford F-150 was the Platinum trim at $48,210. By 2016, the starting price of an F-150 Platinum rose to $56,235, an increase of 16.6 percent. Ford also added another the Limited trim level, which slots in above Platinum and starts at $58,885. Four-wheel drive variations top $62,000.
To help buyers into more expensive trucks, automakers often offer zero-percent financing or loan terms reaching 72 or even 84 months, said Ed Kim, a vice president at AutoPacific, an industry consulting firm.
“Ten years ago the average auto loan length was 48 months, and now the average is well above 60,” Kim said. “Certainly these longer loan terms are contributing to people being able to afford the payments on these more expensive vehicles.”
Affordable fuel, particularly over the last 18 months, has contributed to the rush for light trucks, he said.
Fuel efficiency in light trucks has improved to the extent that to the consumer, there isn’t much mileage difference between a 2017 Nissan Altima sedan with an Environmental Protection Agency rating of 31 mpg for combined city and highway driving and its larger 2017 Rogue crossover sibling, which has a 29 mpg rating, Lyman said.
Lem opted to lease his new Tundra instead of buy, in part because he isn’t sure whether gas prices will rise in the near future. In the meantime, low payments at the pump made his decision for a more expensive full-size pickup truck an easy one.
“It’s much more about what kind of vehicle do you want, as opposed to what does your fuel budget allow you to have,” said King.