For the month of April, the automotive industry took a huge loss in sales. Although companies offering sales online did not suffer as much as brick and mortar companies, there were still significant shortfalls. The interesting thing though, is that during the global pandemic lockdown, sales of trucks dominated other vehicles for the few sales there actually were. It’s a trend that is continuing in May.
Why trucks are important
Manufacturer’s biggest profits come from the truck sector. So, during the economic downturn, the automotive dealers that were still permitted to sell vehicles have been happy to sell anything, but are happiest about selling trucks. It allows them to make up some ground in profit in order to keep the bills paid at the dealership. So, the dealers treasure every customer a little more right now during the pandemic lockdown.
Trucks were not being made
The lockdown has had other ripple effects as well. Dealerships in areas where trucks have always been popular are now starting to show signs not having enough inventory. While vehicle deliveries have been happening during the lockdown, those deliveries have been of vehicles that were already manufactured and had been sitting in ports or transportations hubs. They have not been of newly completed trucks from the factory. That’s because the factories have been in lockdown as well. It has only been this week that factories have started to produce vehicles again.
Manufacturers may have idled their plants up until recently, but they did not prevent their dealers from selling anything. The manufacturers have even tried to spur sales by creating great discounts and offers of lower financing rates when partnered with certain financial institutions. The approach has worked. Many dealers are claiming that the few sales they are making are mostly for trucks, and many of those customers took advantage of the sales.
Lack of inventory
According to Reuters,
“Our biggest issue will be if we don’t get more inventory,” said [Jerry] Bill, General Sales Manager of Stew Hansen Chrysler Dodge Jeep Ram, which sells around 2,700 new vehicles a year in Urbandale, a suburb of Iowa’s capital Des Moines. After a drop in sales in April when consumers stayed home, Bill expects pickup truck sales to end May, similar to where they were a year earlier. And if demand remains strong, Bill said he will run out of popular models in June.”
The Reuters report added,
“Overall U.S. sales of cars and light trucks crashed to the weakest pace in 50 years last month. But sales of big Detroit brand pickups, particularly in southern and western states less affected by the outbreak, significantly outperformed the market, industry executives and analysts said.”
Is now the time to buy a truck?
It’s a strange world for dealers right now. Truck sales are their bright spot during the pandemic. Their truck sales are doing well, but inventory is limited. Yet, advertising continues to push great deals on trucks. So, do not be surprised to see the market might flip the off switch on the great deals. If demand starts to outweigh supply, then those good deals may not last too much longer. As has been seen in any industry, when there is not enough product to meet the demand, the prices start to go back up. So, now may be the time to jump in and get a truck if you have been holding off.