DETROIT – The fullsize pickup market will continue to surge this year, fueled in part by the return of so-called personal-use buyers, predicts Fred Diaz, president and CEO ofGroup LLC’s Ram brand.
A decade ago, when gas prices routinely were under $2 a gallon, the segment attracted consumers who used their vehicle for daily commutes, rather than as a work truck. The industry coined several terms for such casual buyers, including “personal-use” and “wind haulers.”
But when gas prices eclipsed $4 a gallon in summer 2008, and the recession began to tighten its grip on U.S. consumers, the fullsize pickup market was left largely to building contractors and landscapers.
However, fullsize pickups sales actually began their decline in the mid-decade.
In 2005, deliveries were down a mere 0.52% from prior year, but still accounted for a robust 2,485,589 units, according to Ward’s data. But by 2006, they had slipped 10.3% to 2,229,526, followed by a 3.5% downturn in 2007 to 2,152, 356.
Driven by high fuel prices and a falling economy, fullsize pickup sales tumbled 27.2% in 2008 to 1,566,177 units before plunging another 29.0% in 2009 to 1,110,993.
Sales rebounded 20.2% last year to 1,335,551 units, and even better days are ahead, Diaz tells Ward’s during an interview at the recent North American International Auto show here.
“I think the pickup segment is going to continue to get healthier,” he says. “I see personal use buyers returning.”
Diaz points to several factors sparking his optimism.
“Following the credit and economic crisis, I think there’s a lot of pent-up demand for buyers who were delaying their purchase because they wanted to make sure had a job,” he says, noting signs point to continued economic improvement this year. “Consumers are ready to trade their trucks in for new ones.”
He also points to a sub-segment of personal-use buyers who have families.
“When you look at our (pickup) interiors and how (the trucks) drive and handle, particularly our light-duty with its coil suspension, that’s a family vehicle,” he says. “We’re seeing a lot of families going to trucks because it gives them the ability to do stuff like haul toys and whatnot.”
Fuel economy also will attract more buyers to the segment, he says. The Ram 1500 with a 5.7L Hemi V-8 with cylinder-deactivation can achieve 20 mpg (11.7 L/100 km), which is on par with many other family-haulers, including cross/utility vehicles.
“To drive a big truck like that and get 20 mpg is pretty incredible,” Diaz says.
But there are potential stumbling blocks to growth in the segment, with fuel prices are at the top of the list. Should the cost of a gallon of regular-grade gasoline eclipse $4, it will likely hamper growth, he says.
Continued improvement in the housing market is another driver for growth. “I think the housing market is a big part of what ultimately will decide if the truck segment explodes,” Diaz says.
It has been 14 months sinceadopted the Ram brand for its line of pickups, breaking away from the Dodge designation. Diaz admits there has been mild confusion among consumers over the name change, but nothing to indicate the move was a mistake.
“Some of the customers early on were concerned because they were proud to say they drove a Dodge truck,” he says. “But if you want to say you’re driving a Dodge truck, you’ll always be able to say that because our Ram trucks will always be VIN-plated as a Dodge.
“We are just going to market them as a Ram so we can have two distinct personalities: the Ram truck brand and a really hip, athletic Dodge brand.”