Sobering Times Reflected in Light-Truck Sales

Tight credit and rising fuel prices are forcing consumers to think more soberly about their choices in the automotive marketplace.

Evidence of the trend is not just anecdotal. Light truck sales, for example, were down again in January, continuing a trend that started a year earlier. Light trucks include pickup trucks, vans, and sport-utility vehicles, models such as the BMW X3 and X5 sport-utility vehicles, whose collective U.S. sales fell 19.15 percent in January, down to 3,422 from 4,233 sold in January 2007.

Light trucks often consume more fuel than cars and easily can cost more than the average family sedan, characteristics that make them less attractive to buyers in the current market.

Even the Ford F-Series, long the best-selling pickup truck in the United States, is taking a hit with its sales falling 8.44 percent last month to 41,125, down from 44,919 sold in January 2007, according to the latest U.S. vehicle sales figures published by the Automotive News Data Center.

The growing consumer reluctance to jump into pickup trucks is blunting the aggressive, expensive truck marketing efforts of Asian manufacturers such as Toyota, which has been trying to haul away a big piece of the American truck market with its huge Tundra pickup.

Tundra sales nearly doubled in January to 12,073 from 6,321 sold in January 2007. But Toyota executives were not applauding, because the Tundra's January 2008 sales performance was at least 6,000 trucks below what the company expected to sell for the month.

No one in the industry is predicting the demise of pickup trucks. In fact, more manufacturers, including at least one from India, are planning to join Toyota and Nissan in going after the U.S. pickup truck market. But all of those manufacturers are likely to find the U.S. landscape for pickup trucks and other light trucks considerably different from the one that existed five years ago, when gasoline was still cheap and easy-financing schemes were abundant.

A part of the difficulty confronting the industry was revealed earlier this month in San Francisco at a meeting of the American Financial Services Association, which preceded the 91st Annual Convention and Exposition of the National Automobile Dealers Association.

The money people said they were cutting off the spigot of subprime loans to car dealers and their customers, making it more difficult for many tradesmen, day laborers and others who depend on light trucks to buy them. Cutting off the subprime money also is eliminating many image light-truck buyers, consumers who buy pickup trucks and sport-utility vehicles more for style than work.

Tight credit plus high gasoline prices mean that more of those customers are beginning to switch to used vehicles, or to buy less expensive, more fuel-efficient new models.

That means the bad news for light trucks is turning into good news for little cars, long ignored in an America drunk on cheap gasoline. Again, January sales numbers from the Automotive News Data Center are indicative. Sales of small cars are rising across the board. Even the itty-bitty Kia Rio, not exactly an automotive heart-stopper by any measure, posted a 66.8 percent gain last month with sales of 2,709 cars. The Chevrolet Aveo, once the laughingstock of the Chevrolet line, has been remodeled and has found a new life in the U.S. automotive market. Its sales were up 40.2 percent last month. And small cars with panache, notably the Honda Fit, were going gangbusters. Honda Fit sales were up 120 percent in January, and they show no signs of abating.

For consumers who still hunger for more expensive, high-performance cars and trucks, but who don't have the cash or financing to swing the deal, there is a shining glimmer of hope in all of the bad news. Auto repossession lots are overflowing with cars and trucks, including a number of luxury models, snatched from buyers who fell behind on their car loans.

Neither the banks nor the finance companies want to hold onto those repossessed vehicles. They want to get rid of them as quickly as possible, which means they are in a mood to deal. Industry estimates are that 1.6 million cars and trucks will wind up on repossession lots this year, a 10 percent increase over the number of cars and trucks sent to those lots in 2007.

If you don't mind cruising down that boulevard of broken dreams looking for a bargain, go for it.