A January report by Dave Cantin Group, an advisor to auto dealers, said demand for large pickups and SUVs is reaching a peak.
One question is, if true, what does that portend for the auto industry?
Some automakers — including General Motors Co., Ford Motor Co., and Stellantis – have mostly given up on producing cars to concentrate on large pickups and SUVs.
Profits from those vehicles were supposed to finance investments in electric vehicles. Deliveries of large pickups, in particular, are very profitable. Sales of the Ford F-Series, combined deliveries of F-150 and Super Duty trucks (F-250 and above), are at the top of U.S. sales.
The Dave Cantin Group report raises questions about that strategy.
“The industry has moved to more expensive vehicles in general,” Brian Gordon, president of Dave Cantin Group, said in an interview.
Some factors, such as low interest rates (until recent years), have helped. That made large trucks “relatively affordable from a monthly payment perspective,” Gordon said.
In the future, there are questions about how long the trends can last, according to Dave Cantin Group.
“Manufacturers with broader choices are going to get the attention of consumers,” Gordon said. “The root cause is affordability.”
It appeared the Federal Reserve was ready to lower interest rates. That momentum has halted amid continuing high inflation.
Also to be considered is the Trump administration’s trade war against Canada and Mexico. Tariffs are levied on companies that import goods.
Trump has levied 25% tariffs on Canadian and Mexican products, while pausing the tariffs at times.
The final outcome is yet to be determined. Regardless, the tariffs have the potential to raise vehicle prices, as well as monthly payments for consumers, because auto industry supply chains have vehicles and components crossing borders multiple times.
“Americans still love their trucks,” Gordon said. “Ford is going to sell F-150s.”
A Ford-150 has a starting price of $38,810 while more expensive versions can reach $79,000.
The question, he said, is whether buyers start seeking out alternatives.
“The big risk is you start to lose customers,” Gordon said.
Dave Cantin Group refers to the trend as “peak truck.”
“Peak truck is a symbol of what’s going on in the industry,” Gordon said. “We don’t believe this is a short-term thing. This is something that’s going to persist.”
Gordon added: “None of this is good for affordability. Americans will look to how to drive down that monthly payment.”
