Report: Big Pickups Are Stacking Up on Dealer Lots, Could Price War Ensue?
Big pickup inventories have apparently been piling up on dealer lots, and analysts are beginning to fear that automakers, domestics in particular, will be forced to ramp up incentives if demand doesn’t return, according to a recent report.
Apparently, General Motors is gaining attention because its Chevrolet Silverado and GMC Sierra full-size trucks stood at 122 days at the end of June, about 50-percent higher than the 80 days generally preferred. This is also above the industry’s average of 99 days, reported Reuters, sourcing Ward’s Auto data.
Chrysler and Toyota are also in a similar position, with their inventories sitting at 93 days’ supply, while Ford stood at 79, the report indicated.
Since some economists, such as Manheim’s Tom Webb, are predicting a double-dip recession, or what would look like a “W” on a graph, speculation is apparently ramping up that automakers and dealers could get into pricing wars to move these large pickups if demand remains down.
In the past, Ford, General Motors and Chrysler were well-known for following each other’s lead when it comes to incentives. So if one automaker ramps incentives up to spark demand, the others could soon follow.
TrueCar.com’s Jesse Toprak is predicting that if demand doesn’t come back for these models, then a fire sale may result.
Prior to GM and Chrysler going through bankruptcy, these fire sales were much more common and likely one of the contributing factors that deeply cut into Chrysler and GM’s profits, ultimately forcing the companies into bankruptcy.
Since these two automakers have come out of bankruptcy, both have appeared to show some restraint in incentives and industry analysts seem to be watching this latest inventory trend with a close eye.
Ford, which avoided bankruptcy by leveraging many of its assets before the capital markets crashed, has also been showing restraint.
To see the full Reuters report, visit www.reuters.com/article/2011/07/08/us-autos-trucks-idUSTRE7670G520110708.