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Automakers Launch Full-Size Truck Incentive War

Up to $16,000 in givebacks and discounts on some 2018 models.

by on Jun.07, 2018

FCA has some of the largest incentives -- up to $16,000 -- available on its 2018 Ram.

Despite strong demand, US. Automakers have launched some of the most lavish incentives on full-size truck models seen since the end of the Great Recession, with discounts of as much as $16,000.

The move might come as a surprise considering pickups have retained strong momentum despite the weakening of the broader U.S. automotive market over the last year, and the latest round of incentives threaten to cut into the earnings delivered by what are traditionally the most profitable product segment in the market.

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Automakers appear to be acting for a variety of reasons, including the need to clear inventories ahead of the launch of all-new models from both General Motors and Fiat Chrysler Automobiles, as well as the potential weakness of segment leader Ford which lost thousands of units of production due to a supplier problem last month.

(Pickups shine in an otherwise mixed month for U.S. car sales. Click Here for more.)

Ford’s F-Series pickups have been the perennially best-selling vehicle in America, as well as the number one pickup, for decades. And it had, if anything, Ford been gaining momentum in May, when it sold more than 80,000 of its half-ton F-150 and heavier-duty models like the F-250.

FCA and GM appear to be trying to take advantage of a brief halt in Ford F-Series production due to a supplier plant fire.

But disaster struck early in the month when an explosion and fire struck a supplier plant in Michigan producing critical magnesium components used in Ford’s full-size truck line. Within days, a shortage of parts forced the maker to slow its truck lines and then shut them down, one by one. By the time it was able to line up an alternative source it had idled more than 10,000 hourly workers and lost thousands of units of production.

That incident “changed the game,” Jeff Schuster, the head of forecasting for LMC Automotive, told the Reuters news service, encouraging competitors “to ratchet up incentives on the current models to go after weakness at Ford.”

The Dearborn-based automaker had a fairly hefty inventory ahead of the fire – manufacturers often hold more than the industry-normal 60-70 days’ worth of pickups on dealer lots. But the fire could strain things in the months to come unless Ford can rush out more trucks by scheduling intensive overtime.

(Ford restarts F-Series production. Click Here for the latest.)

Competitors GM and FCA have other reasons to be boosting incentives. For one thing, both manufacturers plan to launch completely new versions of their own trucks for the 2019 model-year: the Chevrolet Silverado and GMC Sierra, and the Ram 1500. They want to both build momentum going into those launches while also ensuring they have a minimum of inventory once their new trucks reach showrooms.

(FCA reveals plans for more pickups as part of 5-year strategy. Click Here for details.)

GM and FCA also want to clear dealer lots before all-new 2019 trucks, like this Silverado, debut.

Meanwhile, Ford not only wants to avoid losing its own momentum but also hopes to give a good start to the diesel-powered version of the F-150 that it is launching for 2019. All three manufacturers, after years of delay, have responded to demands for better fuel economy by introducing light-duty diesel models.

The biggest discounts, right now, are being offered by FCA, according to Reuters’ survey, about $16,000 on some versions of the Ram 1500. The news service found some dealers discounting the 2018 Chevy Silverado by as much as $13,000, with Ford and its dealers countering with price cuts of up to $12,000.

Discounts appear to include both factory incentives and dealer cost-cutting, and the figures traditionally vary by region and even individual dealers who may slap on additional givebacks.

The truck wars could prove costly considering manufacturers are offering discounts that are larger than the cost of some economy cars. But their pickups are some of the most profitable products on the market, analysts note, with average transaction prices pushing into the mid-$40,000 range. That provides plenty of room for price-cutting, especially if the manufacturers trim back as they enter the 2019 model-year.

(Click Here for a first look at Ford’s 2019 F-150 Raptor.)

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One Response to “Automakers Launch Full-Size Truck Incentive War”

  1. Dick says:

    Since Ford doesn’t want to sell cars anymore, they should give one away with every F150.