Tuesday, October 04, 2005

Truckageddon Watch

by Tom Bozzo

September auto sales reports are in, and you know what it's a bad thing to be stuck selling when regular gas is $3/gallon? Big trucks.

While a portion of the declines for the domestic manufacturers — for instance, 58% y/y for the Ford Explorer, 61% for the larger Expedition — may be attributable to inventories depleted by the employee discount promotions, poor showings for generally more fuel efficient import trucks suggest high fuel prices are inflicting a good bit of the damage. GM likes to blame some of its large-truck decline on anticipation of its new large SUV line, due in three months or thereabouts, but Ford's updated Expedition is still a year off. Used SUV prices also have slumped markedly.

Nor are inventories exactly at extraordinarily low levels: GM's report indicated that it had just under 60 selling days' inventory at the September sales pace, considered adequate by industry standards. Assuming some combination of the end of the employee pricing deals, stubbornly high post-Rita gas prices, and the perhaps even nastier heating fuel price crunch conspire to send sales down something between a steep slope and the face of a cliff for the rest of the fall, it'll be an ugly winter in Detroit.
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