Sunday, July 10, 2011

Pickup Trucks Inventories Rising, Manufacturers are Worried

It seems like US carmakers are beginning to worry about the rising inventory of their big pickup trucks. For example, General Motors has an inventory of 122 days (or 4 months) of its Chevy Silverado and GMC Sierra according to a report from Reuters, or 50% higher than the typical industry inventory of 80 days.

But GM isn’t the only automaker in distress. Chrysler, Toyota and Ford also are behind their projected sales, with 93 days inventory for the first two makers and 79 days for the third respectively.

“Most manufacturers overestimated the kind of demand they were going to get for full-size trucks in the first half of the year” commented TrueCar research website’s analyst Jesse Toprak. “Its’ not a crisis yet, but it’s above healthy levels”.

So far, pickup truck sales have been on the rise for US carmakers. GM’s Silverado and Ford F-Series have seen their sales increasing by 10%, and Dodge Ram and Sierra sales have risen even more, by 32% and 22% respectively. Overall, in the first six months of 2001 sales of cars and light trucks have increase by 13%.

So why all the fuss? Because despite the rise in the first half of the year, the worsening state of the economy makes the carmakers predict a drop in demand for the second half, forcing them to offer higher incentives and, thus, reduce their profits.

“If demand doesn’t come back in the second half, that means fire sale come December” said Toprak referring to GM, which relies heavily on its wide range of pickup trucks. “On the other hand, if demand does rebound, it will be sitting pretty with lots of trucks to offer”.



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