The U.S. car companies make more money on SUVs and pick-ups than they do on low-priced sedans and coupes. That is old news and hardly worth repeating, except alongside the word that inventories of these trucks is piling up.
According to the AP, "Used SUV sales in March were down 14 percent nationally compared to last year." When used cars don't sell, neither do new ones. Used car dealers will cut prices to move supplies of SUVs, which they cannot hold because they need cash-flow. An abundance of inexpensive, cheap trucks will be attractive to those who need a replacement vehicle during a recession. That leaves new car dealers and firms like General Motors (NYSE: GM) and Ford (NYSE: F), which supply them in a bind.
The price of Ford's stock moved up sharply last week when it posted better-than-expected earnings. Almost all of that gain disappeared the next day when analysts became more clear-heading about the continuing drop in Ford's sales.
That drop is about to get much worse.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 1)
4-28-2008 @ 1:41AM
gumbo koontz said...
SUVs are ok if you carpool with at least three other riders or so everyday . Pick up church friends on Sundays. Do volunteer work with groups for example. I have nothing against SUVs as long as most of seats are occupied most of the times. SUVs may be great for old geezers out on a trip! Use your imagination.... Or export to China or India.... There is a lot of them more than happy to share rides with strangers over there unlike snotty snobby Americans here..
4-28-2008 @ 5:58AM
Paolo said...
Well, finally some good news ;-) Yesterday I was reading that in China SUVs' sales rose about 50% in 2007, and this growth momentum is to continue in the next one or two years... Sure they're importing our bad habits, but let's do some math here... the number of SUVs/Cross-overs sold in the US in March 2008 equals the chinese total sales during 2007...
4-28-2008 @ 8:21AM
Micro1234 said...
Let's be fair here. Yes this is negative news for both Ford and GM and especially Chrysler since most of their SUVs have been discounted below used car prices for years. However, Toyota is not immune to the fallout in the SUV, fullsize truck market. They are the ones who just added 300K units of production last year that it turns out they don't need. The brand new Sequoia in March ended up with over a hundred days supply sitting unsold on dealers lots. It is the newest SUV on the market and it will need even bigger rebates than the $6,000 rebates they are pushing on the Tundra to have any semblance of acceptable sales. I would hate to invest the billions of dollars in a new plant not to mention the engineering costs associated with designing both the Tundra and Sequoia and then have to sell them for $5,000 less than projected. I would guess that their breakeven point on these two vehicles would have to be extended a few years. So let's not forget that there are others affected by the glut of SUVs on the used car lots in addition to the Big 3.
4-28-2008 @ 3:37PM
jpdr1100 said...
Toyota can afford the falling sales of SUVs and pickups. They are making money. Lots of it. Detroit for the most part.............not so much.
6-08-2008 @ 1:07AM
Picasso said...
Gas guzzlers are finally a dying race LOL! Thank God! All they do is cause enviromental damage by polluting the air we and our children breath every day. Just think, if running your car in a garage can kill you, what do you think happens when inhaling all these fumes everyday does to your health whenever you step outside and walk along the sidewalk? Can you say Cancer? See, there is a positive side to high gas prices, means most people are getting rid of those pollution monsters finally LOL! Can I hear an amen? I mean lets be real here, does the average American NEED such a pwoerful vehicle to get their sorry ass to work? Yeah, must be some heavyass briefcase you need a SUV to take it to work hahahahaha!