In 2019, over 75 percent of new vehicle registrations in the USA were of "light trucks." In the state of Minnesota, that figure jumped to 82 percent of all new vehicle registrations.
To understand why these figures are significant, we must define what a light truck is. The automotive industry defines a light truck as a conglomeration of pickups, SUVs, and crossovers. Curiously, this definition does not include minivans.
Because of these numbers, Automotive News and the Twin Cities Auto Show came together to put on a National Truck Summit in Minneapolis. This confab was put together to try to understand how we got to this point where retail sales turned this huge number into private vehicle ownership and everyday use.
The story is really an old one. The proliferation of the SUV on American society has been in our forefront for over 30 years. The expanded use of the pickup truck as a personal vehicle instead of a work truck has also been a recent phenomenon.
The result of these trends was interesting to witness. Automakers have swapped sedans, coupes, hatchbacks, and wagons for new SUV and crossover models. There had been an increase in offerings in the pickup truck arena.
And, now what? That is the question I brought to the National Truck Summit that was held just a few minutes from V&R's headquarters.
To look at the present, you must look back. The Summit did exactly that. Our speakers gave us a view of how light trucks have progressed from simple vehicles used for commerce and the nation's war efforts to something families use every day. Simply put, light trucks were seen as utilitarian transportation in the past are now used as luxury vehicles for families today.
This translates into numbers. As Matt Weiss, President of JATO Dynamics pointed out that in 2010, 1.6 million pickup trucks were sold in the USA. That number grew to 3.1 million units in 2019. Of those 3.1 million units, 76 percent of them were sold as crew cabs – a full four-door cab design offering passenger space beyond a luxury flagship sedan.
Not to mention that pickup truck configurations have grown over the past several decades. A half-ton Ford, Chevrolet, GMC, and Ram pickup truck can be configured beyond imagination considering the number of engines, drivelines, cab, box, and trim choices. This is an important point because consumer choice does drive this segment despite dealers assuming that a consumer wants a certain configuration that would be deemed popular for their market area.
On the SUV side of the coin, the growth in this segment is much more dramatic. Weiss stated that in 2010, only 3.4 million SUVs and crossovers were sold in the USA. That number grew to 7.9 million last year. That is a very sobering fact that still upset automotive enthusiasts today.
This was why I had to point out on the Carbitrage podcast last Saturday that the proliferation of the SUV is the reality of the marketplace. Families want a vehicle that can sit comfortably, more upright, with expanded cargo space, the assumption of improved traction through available all-wheel-drive systems and the convenience of a sedan. And, yes, those conveniences include the necessity of driver assistance systems to keep their SUVs safe.
If you have read this site over the years, this all comes as old news. I reviewed more than my share of trucks and SUVs to know that these light trucks will be the bane of this industry. They are driving revenue for the OEMs, the supply chain, dealerships, and lending institutions. The consumer is not going to yield to the rising price of a pickup truck because they want one very badly. Not with financing now reaching into the 84-month term level.
Even with the staggering growth in light trucks, there were questions about whether sedans, coupes, hatchbacks, station wagons, and convertibles will survive, Erin Klepaski, Senior Vice President of Auto Sales Finance at Ally Financial was "not convinced that we're not done with cars." She pointed out that despite the higher take on light trucks, the used vehicle market is good and that there are "lots of SUVs coming off lease soon." In all, Klepaski summarized that USA consumers want bigger vehicles…i.e. pickup trucks and family SUVs.
While we parse out the North American vehicle market and how the light truck has since taken over everything we do – whether we are automotive media, the industry, or any supporting function to either entity – there is another headline we have to contend with at the National Truck Summit. And, yes, it has to do with our industry.
In one way or another, the speakers at the Summit are acknowledging the impact the coronavirus known as COVID-19 is having on current and future production plans for all vehicles worldwide. While both Jay Sackett, Executive Program Manager and Product Development Officer of Toyota Motor North America and Tim Stoehr, North American truck Regional Product Line Manager of the Ford Motor Company, stated that there are no current impacts on production on their lines, a different story is playing out elsewhere.
Mark Boyardjis, Global Tech Lead Automotive Advisory Services of IHS Markit explained that while there are no impacts now, COVID-19 could threaten the industry from China. According to Boyardjis, there are 18 production and assembly facilities in Hubei province of China that are re-closing temporarily until – possibly – March 11. In the first quarter of 2020, we could – and, will – see a decline in production activities in China of 45 percent.
When we see delays in production, that will result in delays in sales and deliveries to consumers. Boyardjis pointed out that it could be a wave of impacts starting with China and South Korea, eventually reaching the European Union, the United Kingdom, and North America. He did give us some hope, as there could be a resurgence of production and resulting vehicle deliveries in the second half of 2020.
COVID-19 is going to be at the front burner of everything we have to deal with, including canceled events for the media and many other people. Whether it is out of fear, ignorance, misinformation – or, whether it becomes more real in the time ahead – this is a headline that will make our jobs very interesting in the months ahead.
But, one would hope that this coronavirus does not become the headline when people need to replace a vehicle or add another one to their household or business. Commerce has to take place, no matter what. Or, that is what I hope would continue to happen.
Nonetheless, the National Truck Summit is a reality check on the automotive industry as it stands today. The light truck train is not going to stop anytime soon…unless there is a serious change in the vehicular habits of Americans and others worldwide. If you ask me, the course remains current and we should be seeing some products that could spark new directions for the light truck market very soon.
Can you say, "Ford Bronco?" Or, "F-150 EV?"
All photos by Randy Stern