Big Trucks, Big Profits

To hell with saving gas: As TTAC's sales analyst Tim Cain wrote a week ago, big trucks are back with a vengeance. It's not just that sales are up by double digits. Transaction prices are up big. "In many ways, this may be an even better time than before the recession," writes Automotive News [sub].  . "Although volumes remain well below the previous peaks, average transaction prices for full-sized pickups have increased at more than double the average rate for the industry since 2005." According to Edmunds average transaction prices for large pickups are close to $40,000.  In 2005, the average big pickup left the dealership for $31,000, up 29 percent. In the same time-frame, transaction process for all automobiles rose only 13 percent. This bodes well for Detroit's profits. According to Morgan Stanley, the F series accounted for 90 percent of Ford's profits, while the Silverado and Sierra generated two-thirds of GM's earnings in 2012.  What is REALLY driving profits is high trims/. Says Automotive News: "Pickup transaction prices have risen in large part because of increasing sales of high-end trims, including the F-150 King Ranch, the Ram Laramie and the upcoming Silverado High Country. A 4×4 2013 F-150 Limited has a starting price of more than $54,000. Ford's Scott said 30 percent of F-150 retail sales and more than half of F-series heavy-duty pickups are so-called high-series versions. "Our high-series mix has never been better than it's been these last couple of years," Scott said. "If you go down in Texas, it's not uncommon to see a King Ranch on a construction site. It's their office. They're working out of it. They want the refinement, but they need the capability as well." from The Truth About Cars http://www.thetruthaboutcars.com

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