Auto Sales Stats Show Permanent Consumer Shift to Light Trucks

July 03, 2017 by Ryan ZumMallen, @Zoomy575M

The buying preferences of American consumers continue to shift from compact cars and sedans to the more utility-centered pickups, crossovers and SUVs that make up the light trucks market. New research from leading analysts indicate the trend is here to stay.

Through the first six months of 2017, total vehicle sales dropped by 2.1 percent compared with the same period in 2016. However, sales of light trucks grew by 4.6 percent, outpacing the total industry, according to research firm Autodata Corp. Sales of light trucks now constitute 61.9 percent of the overall market, up from 57.9 percent last year.

New reports from price forecasting firm ALG and the University of Michigan Transportation Research Institute suggest that the swing to light trucks will continue to gain momentum.

“We believe this will be a sustainable and permanent trend,” analysts wrote in the ALG report.

Light trucks now comprise five of the seven fastest-growing vehicle segments over the past 10 years, according to the report, “Sales Mix: Cars vs. Trucks.” Compact SUVs like the Honda CR-V, and premium compact SUVs like the BMW X1 have made the biggest gains across all segments.

Customers are turning away from cars and sedans, accelerating the rise of larger vehicles. (Source: ALG)

Customers are turning away from cars and sedans, accelerating the rise of larger vehicles. (Source: ALG)

Meanwhile, the three most influential metrics to predict the types of vehicles consumers will buy – fuel prices, unemployment and disposable income – have all reached levels that support a stronger truck market, said researchers Michael Sivak and Brandon Schoettle in the University of Michigan report.

The report – “New-Vehicle Market Shares of Cars Versus Light Trucks in the U.S.: Recent Trends and Future Outlook” – states the trifecta of low fuel prices, dropping unemployment rates and increased disposable income will boost truck sales because there is less pain at the pump, more money to spend and better job security.

The average transaction price of large SUVs and pickups has increased at a greater rate than other vehicle segments from 2012 to 2016. Automakers are looking to capitalize on the light trucks trend because even though they cost about the same to manufacture as smaller sedans, they command a higher premium.

“Automakers understand the lucrative opportunity in the growth of light trucks and many brands are introducing all-new light trucks to lure customers into their new vehicles,” according to ALG analysts.

Despite the increased interest in SUVs and crossovers, pickup trucks continue to lead the pack. The three top-selling vehicles in America through the first half of 2017 are the Ford F-Series, Chevrolet Silverado and Ram 1500-3500 trucks.

Through the first half of 2017, total pickup sales increased by 4.4 percent to more than 1.3 million compared with the same period in 2016. Full-size pickup sales rose 4.7 percent while midsized trucks grew by 2.5 percent.

The Ford F-Series is widening its lead over the rest of the field. Through the first six months of 2017 the automaker sold nearly 430,000 trucks, an increase of 8.8 percent over 2016 figures. The full-size truck now accounts for 37 percent of its segment.

General Motors saw sales of both its Silverado and GMC Sierra decrease by 3.9 percent and 6.9 percent, respectively. The company’s share shrunk to 31.2 percent while Fiat Chrysler Automobiles saw its Ram Trucks figures improve by 7.4 percent to capture 21.6 percent market share.

If current trends continue, light trucks could reach as much as 70.2 percent market share, according to the University of Michigan report.

On the flip side, if market conditions shifted in the opposite direction, light trucks would likely not dip below 47.1 percent of the market, said the report.

Because fuel economy for SUV and crossovers – and even some trucks – has improved, consumers would not be as tempted to flock to smaller, more economical sedans if fuel prices were to suddenly surge, said the ALG report.

“Fuel economy for utilities has drastically improved, rivalling midsize sedans of the past,” wrote ALG analysts.

Many crossovers – such as the Buick Encore and Kia Niro – now achieve an Environmental Protection Agency rating that exceeds 30 mpg on the highway. Meanwhile, some versions of the Ford F-150 are capable of 25 mpg highway and the Chevrolet Silverado and GMC Sierra are rated up to 24 mpg highway. The Ram 1500 is available with a diesel engine that can achieve 29 mpg.

Gas prices are likely to favor trucks for the foreseeable future anyway, as fuel will remain “consistent with prices seen before the Great Recession and below prices seen during the earlier part of the decade,” said the ALG report. ALG analysts predict U.S. gas prices will not reach $3.25 by 2023.

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