General Motors Company (GM), Ford Motor Company (F): Detroit Trucks are Second to None, Sorry Toyota

Down the road

What’s most important for investors is that sales of full-size pickup trucks – and massive profits – don’t seem to be ending anytime soon.

“They’re all creating a perfect storm of a very radical recovery for the truck segment for the next couple of years,” TrueCar.com’s Toprak said. “The replacement demand of the full-size truck segment is actually going to be very, very high for the next several years.”

I believe Toprak is exactly right because of the multiple factors that create the perfect storm of recovery he mentions. Firstly, replacement demand will stay strong because the average age of trucks on the road sits at about 13 years, much older than the rest of the industry. Secondly, the construction and housing rebound, in combination with North America’s recent energy boom, could keep demand for full-size trucks strong over the long term. Thirdly, we’re seeing a resurgence in overall popularity of the truck in the U.S. market. “The truck segment really shows no sign of slowing down,” Alec Gutierrez, senior market analyst for Kelley Blue Book, told AutoNews. “A lot of those consumers who sat on the sidelines are now jumping back into the market, even though they don’t have a job in construction and they’re not hauling anything.”

Foolish takeaway

Consider this: The last time full-size pickup truck sales were going this well, all the profits generated went to cover up massive failures in other vehicle segments. Detroit automakers couldn’t give away their vehicles without losing money through massive cash incentives – no one wanted to own a Detroit small car. Today Ford Motor Company (NYSE:F) and GM are making  serious progress in those segments with the Fusion stealing market share each month on Toyota’s Camry. GM is also taking huge strides with its Cadillac lineup, having its best year-to-date surge since 1976 driven by its ATS and CTS models.

It’s very different this time around; these full-size pickup profits will be going to the bottom line. I expect Ford Motor Company (NYSE:F), who is years ahead of GM in lean operations, to have very strong bottom-line profits and margins for its second-quarter earnings call, and the good news should continue throughout 2013.

The article Detroit Trucks are Second to None, Sorry Toyota originally appeared on Fool.com and is written by Daniel Miller.

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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