It's hard to deny that pickup trucks are having a moment. Truck sales have been steadily rising for the past few years, while car sales have gone in the opposite direction. We're not surprised by this trend because pickup trucks have become as comfortable and are almost as easy-to-drive as cars. At the same time, automakers like Ford and Chevy have cut most of their car offerings in favor of pickup trucks and SUVs. What does come as a surprise, is that even during the uncertainty of COVID-19, trucks (which carry a higher average price tag) outsold cars last month. We'll take a deeper dive into this trend, the reasons behind it, and answer the all-important question - is now a good time to buy a pickup truck?
Pickup Truck vs. Passenger Car Sales
According to the market research group, Autodata Corps, pickup trucks beat car sales by more than 17,000 units in April which is a first for the segment. While most auto brands saw sales plummet during the COVID-19 pandemic, Detroit automakers like Ford, GM, and FCA still saw strong numbers for truck sales throughout the pandemic.
Despite FCA's overall decrease in vehicle sales, Ram Truck sales still increased by 7% in the first quarter. Full-size trucks accounted for 40% of GM, Ford, and Fiat Chrysler’s sales in April, and GM pickups made up nearly a third of their total sales, which is a 10% increase from a year ago. The Chevy Silverado saw sales increase by nearly 30%.
In an interview with Bloomberg, Charlie Chesbrough, a senior economist at Cox Automotive confirmed that buyers were not completely deterred by COVID-19: "Even in a pandemic, there are some offers too good to pass up. Many of our daily tracking numbers were showing strong interest in 0% financing offers, as well as a lot of interest in pickup trucks."
Why Pickup Trucks Continue to Sell
How did trucks manage to outsell cars despite a significantly higher average price? The answer lies partially in the customer base. Cox Automotive data reveals it was the middle class that drove truck sales in recent months. The data shows the middle class, with household incomes between $50,000-$99,000 was the population that purchased pickups and SUVs during the COVID pandemic. Upper and lower-income buyers didn't seem to follow this trend.
Cox Automotive predicted that subcompact and compact cars would struggle the most during the pandemic because they are typically purchased by the least credit-worthy buyers, and premium vehicles would suffer because they are seen as a discretionary purchase. Trucks and large SUVs were expected to carry automakers through the crisis because they hit that middle ground.
The reason the middle class flocked to pickup trucks during the crisis can be explained by all the financing deals manufacturers used to boost car sales. Nearly every automaker offered zero percent interest on loans as long as 84-months which is appealing for a large vehicle purchase like a pickup truck. 0% APR deals accounted for 25.8% of financed purchases in April, an increase of 4.7% in March, and 3.6% in February. Trucks made up a significant portion of these loans.
Additional factors that could have boosted truck sales in April are location and gas prices. According to auto analysts, pickup truck sales were heavily concentrated in middle-America where lockdown measures were less strict and enforced later in the month compared to the coastal states. This means the shoppers who wanted trucks were able to buy them, while car shoppers living on the coasts were on lockdown. finally, with dropping gas prices, shoppers are less likely to consider a vehicle's efficiency, which means even gas-guzzler pickups don't pose a concern.
Is Now a Good Time to Buy a Pickup Truck?
Shoppers in the market for a pickup truck have many excellent options to choose from including the award-winning Ram 1500, the efficient Chevy Silverado, or the newly revived Ford Ranger. While there are still generous offers being advertised such as 0% ARP for 84 months on the Chevy Silverado or .9% APR for 84 months for a RAM truck, it's important to consider whether taking on a long-term loan is right for you. Long term loans come with the risk of going underwater on the vehicle and falling into a cycle of debt.
An additional concern is the threat of inventory shortages for some pickup trucks due to the forced shutdown of plants in recent months. FCA reported that the company's vehicle inventory in the U.S. is running low, particularly for some pickup models. “There are certain configurations that will be running short" said FCA CEO, Mike Manley. Based on this news, if you have your heart set on a specific model and configuration, you may be better off waiting.