Why Do People Buy Pickup Trucks?
A few weeks ago we showed that the demand for pickup trucks may not be all that related to gas prices. By looking at historical fuel pricing data and comparing it to sales data, we showed there’s little to no correlation between gas prices and sales. We also did some basic math to show that, for many consumers, the additional monthly cost of operating a pickup truck (when compared to a compact car) is affordable.
If our analysis is true – if truck sales really aren’t influenced by gasoline prices – the question becomes, why? Why do pickup trucks continue to sell despite their higher fuel costs?
Many people suppose that trucks sell regardless of gas prices because American’s need trucks. Trucks are used on construction sites, farms, ranches, mines and oil wells, as delivery vehicles, fire and rescue vehicles, police vehicles, and 100′s of other tasks. All of these uses require trucks, and regardless of any future fuel prices or emissions regulations, trucks will always be needed for these purposes.
Amazingly, however, these work trucks account for less than 40% of total demand for pickups. According to figures from Ford Motor Company (published in the June 1, 2009 issue of Automotive News), only 39% of the trucks sold in the US fall into the “work” category.
The remaining 61% of truck sales, according to Ford, fall into the categories of “personal use while towing” and “image.”
The “personal use while towing ” category of truck sales is substantial – 12% bigger than work truck use. The vast majority of these users are pulling recreational equipment – everything from a 27′ RV trailer to a single Jet Ski. With so many Americans owning boats, ATV’s, dirt bikes, campers, race cars, etc., it’s hard to imagine that this segment will disappear. So long as these items exist, trucks will be needed to transport them from place to place.
Still, there’s some argument as to the size of the trucks that are needed. While big campers and boats will always be pulled by big trucks, how many times do you see a half-ton pulling something that a compact pickup could easily handle? As gas prices increase, truck owners may respond by switching to smaller trucks and SUVs. Of course, having said that, our article about gas prices shows that the cost difference between a compact truck and a full-size truck isn’t that significant (at least in terms of fuel economy).
The “image” category represents 17% of all truck buyers – nearly 1 in 6 consumers. If we accept Ford’s figures as fact, what truck(s) are these “image” buyers choosing?
Logically, an image buyer would be interested in the coolest, biggest, fastest, “toughest” truck on the road. Because pickups are so much more expensive than cars (even a simple Ford Ranger is more expensive than quite a few sport coupes), it stands to reason that image buyers probably aren’t nearly as motivated by finances as the typical consumer. Based on our criteria above, image buyers are more likely to gravitate towards:
- Premium packages (Limited, King Ranch, Denali)
- Larger trucks (dual rear wheel trucks, lifted trucks, etc.)
- Trucks with special features and or monikers (i.e. TRD, FX4, ZR71)
- Trucks with above-average power
All of the trucks that are likely to appeal to “image” buyers (at least in our opinion) are relatively expensive. A dually XLT one-ton Ford diesel, for example, has a base MSRP of $45k. An F-450 King Ranch dually (perhaps the King of all “image” trucks) has an MSRP of $56,955. Anyone that can afford either one of these trucks probably isn’t going to be deterred by fuel prices.
If you accept the following:
- Work trucks will always be needed
- Consumers will always need tow vehicles
- Truck “image” buyers aren’t necessarily constrained by finances
then you have to acknowledge the truck market isn’t going away anytime soon.
Sound off – what do you think:
- Will trucks disappear someday?
- Will consumers buy smaller trucks if gas prices go up?
- Will consumers get rid of their recreational toys so they no longer need a truck?
Filed Under: Auto News