Posted on 02 May 2013 by Neilson
U.S. pickup truck sales boomed in April, contributing to double-digit sales gains at Detroit auto makers as improving home construction spurred new-vehicle purchases by contractors and tradesmen.
Chrysler Group LLC said Wednesday that sales of its Ram pickups rose 49% in April from a year earlier, while Ford Motor Co. said its F-series truck sales jumped 24%. At General Motors Co., combined sales of its Silverado and GMC Sierra climbed 23%.
Overall, industry sales for April rose 8.5% from a year earlier to 1.285 million cars and light trucks, according to researcher Autodata Corp.
For the Detroit auto makers, a resurgence in demand for trucks especially among contractors in the home building industry has been long-awaited. Full-size pickups are big moneymakers for the companies, producing margins that can be as much as 10 times that of a sedan, some analysts estimate.
Rich Savino, the owner of All American Ford in Old Bridge, N.J., said his dealership's F-series truck sales are up a "spectacular" 74% this year through April, with tradesmen replacing old trucks as new home developments pop up.
"I am getting the contractors coming in and expanding their fleets," said Mr. Savino. "This is the start of it. When the trades and contractors are coming in and complaining they can't hire enough people-that kind of stuff to me is a better indicator of the direction we are going" than other economic indicators.
Sales of pickups have historically been tied to housing construction. Real estate has been rebounding this year, with prices up and new housing starts surging by more than a third over the first quarter of 2012. Pickup truck sales have risen by 20% this year through April-three times faster than the other vehicle segments, Ford said in a conference call.
Vinny Sessa, owner of New Jersey Best Lawns, Sprinkler and Fencing, bought nine F-series trucks this year from Mr. Savino to replace his aging fleet.
"We were busy; we had to add to the fleet. But we were replacing some old trucks too," Mr. Sessa said.
The surge in demand may force Ford to step up truck production. Ford is running its F-150 plant near Kansas City, Mo., on two shifts. Chrysler, which is majority owned by Fiat SpA, said in March it would add a third shift to its Warren, Mich., truck plant.
"We are building everything we can right now," said Erich Merkle, Ford's sales analyst. "We will continue to monitor the [capacity] situation."
Chrysler's big increase came in part because of greater availability of its heavier duty commercial Ram pickups, which were recently redesigned and have just begun rolling into dealerships, a spokesman said.
In 2011, GM added a third shift to its Flint, Mich., truck plant in anticipation of a housing recovery. The recovery appears to be kicking in now, but for a period GM had too much inventory.
GM's overall sales rose 11% in April, while Ford's sales of cars and light trucks rose 18% and Chrysler logged an 11% gain. Toyota Motor Corp.'s U.S. sales fell 1.1%, while Nissan Motor Co., Honda Motor Co. and Hyundai Motor Co. reported U.S. gains of 23%, 7.4% and 1.7%, respectively.
The surge in pickup truck sales helped the Detroit Three pick up market share. The trio had 46.9% of the U.S. market last month, up from 44.8% a year earlier.
Among German brands, Mercedes-Benz sold 23,635 passenger vehicles in April, up 5.8% BMW sales rose 10% to 23,225 and Volkswagen AG's Audi brand rose 14% while its namesake brand sales declined 10%.
"Car-buying conditions are strong and will continue to release pent-up demand," said Kurt McNeil, GM's vice president of U.S. sales operations. He added: "the economy continues to move forward and important car and truck launches are just getting under way."
Ford said its April sales were aided by strong demand for its Fusion midsize sedan, F-150 pickup truck and Escape crossover models. Sales were particularly strong on the U.S. East and West Coasts, said Ken Czubay, Ford's vice president of U.S. Marketing, Sales and Service.
GM shares on Wednesday rose as high as $31.08 before retracing and finishing down 66 cents at $30.18. Ford lost 23 cents to close at $13.38, both in 4 p.m. New York Stock Exchange trading.
GM, Ford and Chrysler said it was their best April sales since at least 2008, before the recession of 2008-2009.
"Our sales last month were solid across the board with seven Chrysler Group vehicles recording their best April sales ever," said Chrysler's U.S. sales chief Reid Bigland.
Sales of Chrysler's Jeep Grand Cherokee were up 27% and its Ram Cargo Van more than doubled, all from a year earlier.