Ford Motor Company (F), General Motors Company (GM): Detroit Continues to Dominate Pickup Market

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Not wanting to be left behind, Chrysler’s Ram truck sales came in at 29,644, which was good for a 24% increase over last year. The Ram truck in year-to-date sales is also up 23% compared to last year. The Ram truck brand had the largest sales gain of any Chrysler brand and had its best June since 2007.

Shown in the graph below, transaction prices climb for full-size pickups much faster than the overall industry – driving big top-line revenue gains. This will have a huge positive impact when all Detroit automakers report quarterly earnings later this month.


Information source: Edmunds.com.

“Quite simply, it’s a great time to be in the truck business,” said Kurt McNeil, head of General Motors Company (NYSE:GM) sales operations in the United States, in a conference call last month.

McNeil is exactly right, and it only looks to improve going forward for a few reasons. The age of the average vehicle on the road remains at record highs of about 11 years, yet trucks are kept even longer, clocking in at about 13 years of age. This emphasizes that pent-up demand still exists and will continue to unleash as our economy gradually improves.

In addition to pent-up demand, an improving housing sector and ensuing construction rebound is bringing out contractors who had been waiting for more business before buying new work trucks. This has also been the case in North America’s recent energy boom in oil and natural gas – continuing strong demand in the full-size pickup segment.

As fuel efficiency and CAFE standards continue to increase, we’re seeing truck fuel-efficiency improve enough that the average user who doesn’t haul anything can buy a pickup for everyday driving.

Bottom line
June was the last month of sales for the second quarter. It looks to be a very impressive quarter for Detroit automakers’ revenues and profits, as long as losses in Europe were minimized and incentives were kept in check. Recently, Detroit autos have topped imports in incentives, but with transaction prices on the rise, that impact should be negated. We know one thing for sure: Revenues, margins, and profits should all be increasing on the drastic surge from the full-size pickup segment and the automotive industry rebound in general – something for every Detroit auto investor to be thrilled about.

The article Detroit Continues to Dominate Pickup Market originally appeared on Fool.com.

Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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