Chrysler, GM Struggle to Manage Truck Incentives

By now, the slumping economy is no secret, and neither are gas prices. Separately, each "crisis" would be bad enough; together they create a hugely damaging environment for a traditionally popular automotive segment, trucks.

A cursory look at truck incentives (or the Cars.com Top 10 list, where five of the entries are trucks) reinforces that point. Trucks almost always offer the highest incentives, but rarely are those incentives this high; select California Dodge dealers are offering up to $13,000 off the MSRP of popular trucks in an effort to get huge backloads off the lot. The clock is ticking, too, because those 2008s need to move before the redesigned 2009s come in.

In the meantime, GM dealers are clamoring for more incentives to sell their load of trucks, but the Detroit automaker seems a little less willing to take Chrysler's must-sell-now approach.

The question remains: Would you buy a truck in this climate? How much cash back would it take? Or are you going to wait for the new designs?

Comments

[Tony]

Well...
I am so happy.
How much gas has to cost for them to stop making those trucks alltogether?

[Paul]

Eh, I just bought a truck. The current $4K incentive from GM for the Silverado was enough to get me in. Granted, I would have taken more, but getting a $38K truck for under $30K is just fine by me.

With regard to Tony, Trucks will always be around. Why don't you leave your city sometime and see the rest of the world where they are needed. People like to tow boats and do something called recreation! Farmers need to haul horses, farming equipment etc. Don't forget where the soy beans come from for your tofu.

[Adam]

If it takes high gas prices to make car buyers in our country finally realize that we cannot be so dependant on oil, and that we can't continue to buy bigger vehicles just for the sake of driving something bigger than our neighbor, then keep those gas prices going up! It doesn't bug me all that much, I get 30 mpg and walk as often as I can, I actually spend less on gas than I did 3 years ago because I changed my driving habits, something we all could do! Having said that the only people I do feel sorry for are the people who actually NEED a large truck for their job, this sucks for them, but for everyone else I say ha ha ha!

[Tony]

Paul,
No problems. Recreation - please.
For example, one guy I know got himself large diesel Dodge pickup truck. He needs it for his boat and the trailer he has. But he drives a Camry at all times when he is not in the recreation mode. Unfortunately most people will drive their trucks daily.
So, if people can't be responcible themselves, the rules of economics will take care of business.
I agree, farmers do need trucks. But you... Probably don't.

[Adrock]

I saw a new Tahoe hybrid on the highway this morning. Ooo, look at you, you're getting...22MPG. Wow. Amazing. He had a suit hanging up in the back and was clearly commuting to work. I guess it just bugs me because the entire thing had large HYBRID graphics all over it, like somehow the guy is doing all of us a favor.

[LM]

Well, it's better than him getting 15mpg, right?

I think the market is working itself out, and Detroit will be where it was in the late 70s. If they're smart, they will increase and improve their small car brands now instead of when they are in bankruptcy. 2010 is too far into the future. The time is now.

[sam]

The days of big pickups and giant SUVs to be used as general transportation are OVER. It's that simple.

The vast majority of buyers of such vehicles have no RATIONAL reason for buying. It's just image and "keeping up with the Jones's". What percentage of suv buyers ever go "off road"? Maybe 2% do. What percentage of non-commercial pickup drivers use the truck for anything more than the occasionally hauling some stuff from the local home or garden center?

The price of gas has forced consumers back into, at least partial, reality. Trucks will fall back into their old category - work.

[sam]

To LM: It's amazing how this gas price thing has caught all the makers, including foreign brands, totally flatfooted.

Take a look at both the Ford and GM UK sites:
www.ford.co.uk
www.vauxhall.co.uk
They have tons of nice, efficiently sized vehicles. They also have tons of useful types like wagons and hatchbacks, so you can carry larger packages when necessary. Trouble is that they're on the wrong side of the ocean.

The Japanese makers are not much better than the Americans. They all only have three efficient models at most. The rest are big suvs, minivans, and so-called crossovers - all of whcih eat lots of gas.

[LM]

Sam,

The problem isn't that they dont make them - the problem is they don't make them here. It would cost them too much money to export them over. Gm cannot sell a Fit-sized vehicle here for 20K. The MINI survives because it's a niche vehicle. Same with the SMART. Someone wouldn't go into a Chevy dealer and pay 15K for a SMART. They don't do it for the Aveo.

They just don't do small cars well here. That, and they are sitting on huge factories, sunk costs, which are designed to make hulking guzzlers. They are loathe to change.

[LM]

btw, the new Agila car is 7600 pounds, or almost $16,000 US. The base model has a 1.0L engine. Consider the cost to export and that it probably doesn't meet US crash standards, you have a non-starter here.

[sam]

LM: I guess I wasn't clear. When I said "flatfooted" I meant that the auto makers don't seem to have ever planned for the increase in fuel costs. I did not mean that they should try to import existing cars for the UK or other parts of Europe.

That could have meant using the engineering they did for their foreign models, fixed them for American standards, and have a leg up for the day higher fuel prices hit. Ford did this successfully in the past with both the Escort and he Focus - both sold in Europe before here.

The cars do not have to be like the Fit. After all, the Fit does not get appreciably better mileage than the Corolla, Focus, etc. They just have to provide the makers with a RANGE of smaller vehicles.

Like you said in your first post, the time is NOW. They already have the vehicles. If they had done the engineering, they could retool plants and get product to market more quickly.

[Tony]

Sam,
All but Toyota.
Toyota sells Yaris, Prius, Corolla, Matrix, Camry + xD and xC, all making over 30mpg.

[DonB]

Honda seems to be the exception - they really focus on more economical vehicles, even their Acura division. No V-8s anywhere to be seen. Toyota has the Prius, but they also have the Tundra to equalize it. Honda alone really talks the talks and walks the walk!

[Bowrider]

The market is working itself out. Manufacturers will have to start building fewer, relatively fuel inefficient trucks and more relatively fuel efficient vehicles. GM, Ford, and Chrysler build good trucks. Toyota started to follow suit with the Tundra and Nissan with its Titan, Armada, etc.. Toyota and Nisssan make gas guzzlers too. These efforts to supply the market with trucks was as result of the demand posed by consumers. Now, the demand has dwindled and they are left with excess supply. Excess supply requires lower prices. Pretty simple stuff....

[Mike]

Asinine comments about trucks should disappear all together really show how short sided some people are (tony). There are justifiable reasons for owning and driving trucks and SUVs. I need to transport air conditioners, furnaces, and parts. Some of the air conditioners are becoming so large (because of the higher efficiency rating) that they no longer fit in traditional vans. Where the hell am I supposed to put them in a sedan a or a hatch, on the roof?!!! Ditto for moving stuff for friends. Have fun fitting a dresser or refrigerator in your car. I own a car as well and use it as a commuter vehicle because there in no reason to drive a truck. I do agree though that it is ridiculous to see upper suburban snobs driving solo around in there pretty and polished escilades/navigator/sequoias. . .etc

[Troy S.]

Don,

I disagree. My Honda Ridgeline gets horrible fuel economy IMO.

[Paul]

Eh if people lived more responsibly and lived closer to their workplace much of the gas problems would be alleviated. For instance, my daily commute is a total of 4.5 miles. My wife's is 12 miles. In any given week, my gas guzzling truck uses less gasoline then somebody who drives a "green car" but commutes 30+ miles a day.

Likewise, with regard to me not needing a truck, lets look at the options here in rural Wyoming. A good portion of our back roads are dirt, ruts, or just plain old nothing. So ground clearance is a necessity when it comes to outdoor & backwoods hobbies which make this state so great to live in. Subaru and Honda are eliminated as the closest dealers are 2 hours away for service. I'm not willing to take a day off of work to get my car into the shop. Small SUVs can't haul the gear for my weekend hobbies, plus people comfortably. Full size SUV's can haul the gear, but don't get the similar gas mileage to a truck. I need something that can tow. 4wd is also required for above mentioned off-road driving, but also our long and icy/snowy winters. I also need something that can haul a piece of furniture from the furniture store to avoid paying a $200 delivery charge.

Really to each their own. If a Yaris fits your lifestyle that's great. I've lived in DC, grew up in Columbus OH and while in those areas I had an economical hatchback. It worked great, and the few times I needed a truck, I could borrow one. Once I moved out to Wyoming, I found that I was scraping the bottom on driveways (We don't have underground sewers since it hardly rains, so we have large dips between streets, and in many cases driveways. Once we moved to our new house in the valley, I would have to drive around the long way (an additional 8 miles), as my car could not get up the hill to get out of the valley in the winter time to get to work.

Am I being more responsible by buying a truck then Tony for instance? I am if he drives more than a 1/4 of his rated EPA mileage back and forth to work. If not, I'm still using less gasoline then the average American by a significant amount.

Paul

[Tony]

Paul,
great point.
Live closer to work. I am not "getting" many people. They work in city and looking for house 40 road miles away.
I took one job in 2002, 38 miles away because I had hard time to find one. But as soon as job market turned to me smiling, I swithed to closer to home.
Of course, this is American problem. Jobs come and go, but the car will stay for 10 years.

[Adrock]

Regarding living and working in the same area, its just not that simple. I drive 70 miles a day round trip. The money I make by doing so far outweighs the costs of commuting. The job market where I live, for what I do, is almost non-existent. Then theres the argument that I should move closer. Well, unfortunately, housing prices are out of my reach in those areas.

So long as we're talking about real choices people have, I'm OK with the conversation, but its just not that cut and dry. The person who buys a truck for that 1 camping trip a year has a bit more 'splaining to do than the guy above, who mentioned he needs to carry a/cs and stuff around. Plus, some people just can't afford to buy a fuel efficient car.

Criticism should be leveled where its due, but I'm willing to bet that the pool of people we could find who truly deserve it is much smaller than most of us think.

[andy]

I own a truck, and i would buy a truck if the price is right. The gas situation sucks, but the space, safety, and highway pickup far outweigh the price of gas. I have already determined that $5/gallon is the point at which i will start complaining.
The one thing that i would like to see again is manual transmission offerings for affordable mid sized SUVs. currently i think only BMW offers a manual on their SUVs which sucks because they are too expensive for my.
Another thing that i would like to see is for a maker like ford or GM to produce a 3.5-4 liter 6-cylinder diesel or their midsized SUVs. Hopefully the new uni-body explorer will have such options.

Andy