Truck sales are booming, which is good news for automakers since they result in big profits. Only adding to their bottom-line delight is that the fastest growing area are the highly profitable “luxury” trucks with price tags zipping past $60,000.
New full-size trucks in 2018 were 16% more expensive than those in 2015, and midsize trucks were 3% more expensive, according to CarGurus.com. In fact, the top end of the market has trucks passed the $80,000 mark, and the good news is that there is probably room for even more expensive pickups, according to one truck executive.
“I think there’s still an opportunity (in vehicles) for traditional luxury items, like more materials, audio systems, things like that,” said Duncan Aldred, vice president, Global Buick and GMC, recently during a meeting with journalists.
Aldred noted that often the upper-end buyer already has a luxury vehicle their garage and wants those same materials and amenities in their new truck. He was quick to note that buyers in that segment need to feel like they’re getting their money’s worth from those purchases.
(GMC tightens up premium truck segment with 2020 Sierra 1500. Click Here for the story.)
GMC just introduced its new 2020 model year Sierra 1500 and, while not revealing pricing, has at least two models that either approach or exceed the $60,000 mark. Trucks pushing $80K are usually heavy-duty models, but the advances in safety and infotainment technology are pushing prices up for trucks across the board.
In fact, during the first quarter of this year, Ford’s F-Series performed well, with sales and segment share both up year over year and the retail average transaction price for an F-Series came in at about $47,000 per vehicle — despite all-new products from competitors. F-Series trucks generate more than $50 billion for Ford.
The Ram pickup, which recently overtook Chevy’s Silverado for second in truck sales, achieved its second consecutive month of record sales with 49,106 vehicles sold.
Ford, Silverado and Ram dominate 84% of the sales in a truck segment that includes GMC Sierra, Toyota Tundra and Nissan Titan.
(Strong sales of pricey pickups helps GM beat earnings estimate. Click Here for the story.)
“It’s tough to know if we’ve gotten to the top,” said Stephanie Brinley, principal automotive analyst at IHS Markit. She agrees with Aldred that there is still more room at the top end of the pricing scale, but much of the growth in the segment will now come from the bottom and middle.
As companies continue to add new technology, which Brinley says buyers see as valuable and as a value, buyers are likely to continue to line up and pay bigger money for pickups.
The segment sold more than 2.4 million vehicles last year, and truck makers seem pretty optimistic that sales will continue to grow, especially as they add more content. However, there may be a limit to what truck buyers are willing to pay.
According to a survey conducted by CarGurus, 68% of truck owners think their trucks are overpriced, which is up from 64% in 2018. Worse, respondents feel like they’re getting less truck for more money as 48% of owners also believe trucks aren’t made as well as they used to be.
(To see more about Toyota’s future plans for its full-size pickups, Click Here.)
This is causing some pushback by truck owners, 17% of whom said they will probably move to a different segment next time they buy with 37% switching to an SUV or crossover, and 35% jumping to the “dead” segment: sedans.