Detroit Deja Vu: Incentive Spending Grows

TAWA Pickup Lineup 1 II

Ever feel like you've seen this movie before? Us too. As truckmakers get more aggressive about winning back old customers and attracting new ones with new products, they are falling back on that favorite tool of all automakers — incentives.

It wasn't that long ago that analysts blamed huge incentive costs (the discounts you can get with the purchase of a new vehicle) for many of the truckmakers' problems. Many were maintaining their market share and sales volumes but were not as profitable as they needed to be. When the recession hit and people stopped buying pickup trucks, all the big players took a huge hit — Chrysler was sold to Fiat, GM was "purchased" by the U.S. government, and Ford went to outside investors for cash.

Well, here we go again.

According to The Detroit News, current incentives are as high was $9,500 for select half-ton trucks. The timing couldn't be better for smart buyers as the Ram 1500 underwent a significant overhaul in 2013; the Chevrolet Silverado 1500, GMC Sierra 1500 and Toyota Tundra were redesigned and upgraded in 2014; and the 2015 Ford F-150 just debuted in Texas (arriving in dealerships next month).

The Detroit News reports that there should be some great deals on pickups because manufacturers want to take advantage of Ford cutting back on production as it revamps its two F-150 plants to produce the all-new all-aluminum-bodied pickup. Ford has lost market share in the last few months, while Ram and GM have made gains.

As truck sales move into the fourth quarter, you can bet the competition will get even more contentious as all the truckmakers extend or modify their current finance and incentive packages, with some sounding too good to be true. According to The Detroit News, truck buyers can get $1,500 to $9,500 off the sticker price of certain 2014 models, depending on what you are trading in.

Although all the manufacturers say they want to be careful not to over-extend themselves this time, it's easy to draw comparisons between this economic climate and the one that brought Detroit automakers to their knees several years ago. To their benefit, average transaction prices continue to climb for all the truckmakers; unfortunately, so do incentives.

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"According to The Detroit News..."

Ram boosts leasing

Beside cash on the hood, Ram is building sales through leasing: 28 percent of Ram 1500 models that left dealer lots this year were leased, a very high rate for trucks, said Jessica Caldwell, senior analyst for Edmunds. Ram 1500 leases are up 11 percentage points this year; typically about 10-15 percent of trucks are leased.

I got a ton of factory rebates on my Ford earlier this year. Sure makes the dealership experience a lot more enjoyable when you get $9K off MSRP right off the bat before you've even begun negotiations!

I stuck to my guns on the APR so they couldn't get anything back that way and left feeling like I got a pretty good deal. Not to mention a sweet ride...

I wouldn't say "favorite tool". I'm sure every auto maker would prefer to sell at retail price.
It's also a time of the year when new year models come out and everyone is trying to sell off old inventory.
You'll get nice chunk off '14 model, but won't get the same out of '15.

I don't see any shortage of Ford F150 on any dealer lots in my travels. I have also seen deals for 2014 F150's of up to 14,000 dollars off MSRP.

Now I sure do not see Ford and their dealers having any shortage of F150 trucks to sell like these articles keep trying to claim.

The article did not claim a shortage of F150s. It claimed they were holding onto inventory until they can build up inventory of the 2015s.

The pickup truck market is all used up! Everybody is driving around a new model pickup and still making payments.
Give it to 2017 before pickups sell again.
The SUV market is on fire, everybody is buying one!
GM done their homework with the Colorado-Canyon cause it will attract SUV buyers as a great alternative to an SUV.
Mark my words! you'll see that the Colorado-Canyon will sell like crazy!

Where I live there are MUCH bigger incentives on Ram, smaller incentives on chevy, and even smaller on ford. I've never seen any dealer with a low inventory of pickups so I don't know why people bring that up. I just hope ford offers some good incentives in January/February on the '14 models. Pretty sure I want a '14 but I won't buy one til I drive some '15 models when they show up in a month or two.

Offering up to 14,000dollars off of MSRP is not trying to hold onto inventory Jason.

@Tom#3 - roughly 40% of GM/Chevy large SUV sales are to rental companies.

@Beebe - good idea. That way you can see first had what is different between the 2 trucks. I am looking forward to your comments once you get to drive both back to back.

Sure would be nice to see a breakdown by manufacturer, Ed.

It seems the rebates or incentives are going to 2013 models. 2014 and 2015 models are getting nothing or little.

It's hard to find so called new vehicles of that age here in Australia.

Looking at the rebates Chev/GMC are offereing the biggest, and that's on larger pickups.

Ram is 2nd and Ford is 3rd.

But like I stated this is on "old" new trucks.

The side view of all of these trucks is interesting. The F150 is the most rounded with a stepped look to the grill. The Ram has a rounded snout as well. The Chevy looks the most square.

I have seen a couple of Ford dealers in my area offer up to 14k off on 2014 F-150's but those are the higher trim models that are well equipped. Also there have been discounts up to 12k on Chevy and Ram. There are no truck shortages in dealers around me--they have more trucks than cars or crossovers. If anything there is a glut of new trucks at the dealers around me. I think sales will level off because a lot of people that held back replacing their trucks have mostly replaced them. The hottest selling vehicles are crossovers in all sizes.

@Jeff S,
Looking at the figures cars have increased in sales 2%-4%, pickups 2.8%, CUVs and SUVs have increase I think around 9% over the year.

So Crossovers have increased at over 3 times the rate of pickups.

Now, if sales decline will be see a reduction in pickup sales into negative numbers.

@Jeff S. - In my region Ford seems to have the highest discounts followed by Ram then GM. My local GM/Chev dealer surprisingly has very few trucks on the lot.
Last week I drove through and they did have a new Colorado and Canyon. The first thing I thought when I saw the Canyon was "looks like a Ridgeline grill". The second thought was that it was a "mini-me" of the Sierra. The Canyon blended into the background among the full sized Sierra's.
The Colorado was what I spotted first.
I am looking forward to taking one for a test drive.

@Lou_BC Lucky, I was hoping to see a Colorado. Drove pass the Chevy/Toyota dealer bout 3 days ago. Didn't see a Colorado, just Silverado's unless they had one hiding in the back. Would of been great to compare since taco's would of been only a few steps away.

@Lou BC--I prefer the looks of the Colorado as well. I like the Canyon but it is more of a mini me Sierra. I don't think big half tons are dead but for now I think they have reached a saturation point and sales will go down then level off. I anyone is looking to replace their truck and doesn't care about having a 2015 now is a good time to buy. Around the Cincinnati and N KY area when the Ford dealers offer 14k off then Ram and Chevy match it and vice versa. Drive by most of the dealers and the trucks vastly outnumber the cars and crossovers. The Honda dealership where we bought our CRV contacted us and wanted to trade us even for a 2015 Pilot because they had more demand for the CRV than inventory but they have lots of Pilots even the 2015's. Not interested in trading but they have contacted us several times (our CRV is a 2013). If I really needed and wanted a full size truck I would buy one now because there are some great deals. Regardless of brand loyalty I would say that any of these trucks would give you many years of service even the Chevies which I know many don't like. I can't complain about my 99 S-10 which I have had going on 16 years (if it died tomorrow I would not complain because it has given me more than my money's worth in service, but it has been such a good truck that I hate to let it go). Any of the new trucks will easily give me 10 years or more of service with proper care.

The Detroit News article touches on my views regarding Ford's position.

I do foresee Ford not clawing back ground it loses with the new F-150. If it enters into a battle over big incentives Ford will lose, this will show in it's bottom line.

I'd bet that Ford will increase the transaction price and take less profit from the new F-150. Ford will share the "price pain".

Ram has improved significantly, but l think Ram's rate of improvement will slow down.

Chev will gain sales through tough incentives and with the Colorado. I do think the Colorado is the Dark Horse here.

If our Australian experience is anything to go by, Toyota with the Taco will not lose to many sales as will Nissan's Frontier. These two will enter into a price war with the Colorado/Canyon.

The aluminium Ford is nice, but I do think Ford could initially lose a relatively significant number of apprehensive customers.

The new F Series has an large unknown quality. This will be discussed at length. Even our new Ranger, BT50, Dmax, Colorado, Amarok, etc has taken a couple of years to take off. Even then Nissan and Toyota have effectively combated them with antiquated vehicles.

This also leads me to believe that the oh-ah aluminium pickup will not just walk in and blitz the segment. Far from it.

I also think the Colorado will be competitive. It will take sales away from a larger cross section of vehicle segments than what a full size could.

Even if the Colorado has only 5% of the pickup market it will impact full size trucks.

If Ram gain several more percentage points sales will come from somewhere. I do think GM's Silverado/Sierra can't really improve as much as Ram and when the Tundra/Titan come out.

If the Tundra and Titan are what I assume they will be I do think they will take some HD sales. How many HDs are the lightest duty HDs? How will the Cummins ISV V8's be received? I bet quite well.

As I've been told the pickup clan are conservative. Radical changes will take some getting used to.

That's my current take.

The early reviews for the new F150 are Stellar and off the charts positive and Very Impressive... Game Changer!!!

Plus the new 2.7 EcoBoost will Kill the Ram EcoDiesel if its MPG is close near 27 MPG.... Also beating the GM midsize CC twins!!

No contest... Ford will Win and win Big with a 4-5 Year lead over the competition.... Then the new Ford Super Duties come out in late 2016 and do the same to the HD truck market...!!! Go Ford

The article says Ford has a lot of supply but is limited in some trim levels. I know for a fact I wouldn't find what I would need and would have to order a 2015. Ford is holding onto the F150s relative to what they did last year - that's why incentives are lower and supply is up from a year ago. The up to $14k off is just advertising. In this example, , it says up to to $14k off. But the fine print says it includes ALL rebates, you must finance, you must trade in and you must buy specific models only.

When you click inside it says the most is only up to $12k off and then when you click further you realize you will not qualify for all rebates. ie, military, college grad, trade in, conquest, etc.

The real discounts from Ford if you buy an XLT: $500 XLT bonus cash + $1500 cash back + $1000 if you fianance through Ford + $1500 if you do a trade in.

+ dealer or plan discount.

So you could get a decent deal if you wanted a 2014, but it's not going to be as much off as last year.

Also those $14k off prices include the equipment group discounts which are actually part of the MSRP for combining certain options and not an actual discount.

Here is how a real world example of how my purchase would go down:

$43,705 MSRP including destination.
$40,394 XPLAN including destination.
-$1500 cash back
I wouldn't qualify for -$1000 off for Ford credit.
If I trade in -$1500 cash back.

So I get $4811 total off. That's 11% off.

If I do a trade in $6300 off or 14.4% off.

Years ago I got 24% off end of year. So there are not big discounts yet. $14k off is a bunch of BULL and it will not be what you are really getting.

@Chris, The prices are nowhere near $14k off. $7 to $10k is the most common on a current year. If you shoot for $10 k off and get at least $8k off you will be doing better than most.

If you want the biggest discount you'd have to wait for the 15s to start rolling in, but then you're stuck with whatever inventory you can find.

My advice is to get the 2015 even if it cost a little more.

@Chris, $12k off F150 Texas Editions!!!!!

"$12k off F150 Texas Editions!!!!!"

Rob, Read the fine print. That discount iludes the MSRP discount packages so that is not a true $12k off MSRP.

The dealer writes:
Retail $45,420
Advertised Price
You Save:

But Actual MSRP on the window sticker: $42,670.

If the ad price is even accurate: $9304 off MSRP at best!

That probably includes $1000 finance + $1500 trade in.

So actual discount is $6804. off MSRP.

Nice try though!

@Tom#3--Agree, most consumers who will buy new trucks are not hard core truck enthusiasts like the ones on this site nor are they brand fan boys. Price will influence some but many will buy the truck with the nicest interior and the most electronic gadgets. Most could careless about which truck hauls and tows the most and many just want a crew cab with all the features to use as a family and lifestyle vehicle. Those who use a truck for work purposes will skip the midsize and half ton full size and go to the 3/4 to one ton--anything else to those who use a truck for work is a lifestyle or recreational vehicle and not to be taken seriously.

@Jeff S,
If you take the Ram product bias endorsements out of Tom#3 comment he's quite correct.

I do feel most who buy a pickup will not be brand loyal.

I do think in the US 80% of all pickup sales are in lieu of a SUV or form of SUV, like my pickup is used. Some might tow, but do they tow much? Doubt it.

This is where a vehicle like the Colorado might be a bit of a surprise, but it will not occur over night. The Colorado might offer enough refinement to seduce some full size V6 customers over, it can tow and carry roughly what they can and do it in a very refined fashion. This is new for one of your mid sizers. They aren't agricultural like the current Taco and Frontier.

The Ram diesel has shown it can return better FE than any gasoline equivalent.

The Colorado has shown a midsizer doe and can produce a capable V6 midsizer, with relatively good FE. The diesel Colorado will be the icing on the cake.

Nissan and Toyota still have yet to introduce their next generation of mid and full size pickups. I'm actually surprised at the small amount of detail concerning those two vehicles.

Some tidbits of information would be nice and it would represent good marketing on Toyota's and Nissan's behalf. This would be timely if it occurs right now to take some of the wind out of the aluminium F-150 and Colorado.

I do think Ford has the best marketing an 'hype' department. Maybe Toyota and Nissan should look at how Ford does this. Work out what tantalising pieces they can throw at us.

Maybe Toyota and Nissan have nothing to offer? I do think a V8 diesel Titan and Tundra will canabalise sales from the traditional Big 3.

After reading up on the Navara (Frontier) it could possibly be the most refined midsizer coming on line. We have little information on the Hilux, but I do expect Toyota not to be sitting on it's laurels.

Where I live there are MUCH bigger incentives on Ram, smaller incentives on chevy, and even smaller on ford.
Posted by: Beebe | Oct 17, 2014 4:15:06 PM


@Big Al--The main reason I have pickups is because they have an open bed and can haul things that a normal SUV or crossover cannot. I am not using my trucks to make a living or for towing but my Isuzu has a complete tow package on it so I am sure it is capable. To be honest my use will be in the life style category. I don't have any use for a full size half ton, 3/4 ton, or full ton but then others do. The midsize is just the right size for my type of usage. Most of the people who buy vehicles are not typical of the ones that comment on PUTC or TTAC. Many will buy a truck because they never had one and it is cool to own a truck. The last thing on many customers list would be weight capacity or towing ability--blue tooth connectivity, USB ports, and a host of electrical gadgets along with nice interiors. A truck is no longer just a truck but an urban lifestyle vehicle.

Apparently leasing doesn't carry the stigma that it used to; more people are leasing simply because the monthly payments are less and they simply don't care that they never truly own the vehicle. It may eventually pass that as prices continue to climb, NOBODY but the very rich can even afford to own their own vehicles--the rest forced to lease simply because they can't afford purchase payments.

@Jeff S,
My comment regarding the SUV/CUV is in relation to how a large vehicle is used.

A bed or station wagon back is an individual choice. I've seen may people who load the back of a SUV when a pickup would have been a better choice.

And, I've also seen people who own pickups who maybe would have been better off with a SUV as they carry nothing.

The biggest difference I see between the two is how secure you load is first, then what you can carry. I generally have smallish items in the back of my pickup.

Even when building I use a large tandem wheel trailer that can be loaded with up to 3 tonnes, that carries more than many SuperDuties.

I haven't used that trailer for several years now. It would of probably been cheaper if I bought a small car and hired a pickup or truck when needed.

As for capability, I do think most private vehicles are far more capable than what we need. I'm one of the worst offenders in this area. Look at what I drive!

Does anyone really believe that any dealer is willing to sit on their inventory of F150 trucks?

Floor plans cost lots of money when a vehicle sits for a long time on the dealer lot. The dealer is not going to eat that floor plan cost just so they can look like there is no shortage of trucks.

A dealer is going to move everything they have on their lot. Before someone says Ford will eat the floor plan cost for the dealers let me counter that as that would be a huge hit on Fords bottom line for the quarter and year. I don't think Fords stock holders would be very happy to find out Ford was paying floor plan costs to all their dealers across the nation just to give the impression there is no shortage of F150 pick ups.

The fact is Ford ramped up production of the 2014 models so that during the change over there would not be any shortages. A few high level trim levels being in short supply is no big deal as most are not out there buying a 60,000 dollar high level F150. Regardless of make they all end up with short supplies of the high end trim levels during the model year change overs no matter the brand so that argument is not valid.

The only way you will see any shortage of F150 pick ups is if the new production line has problems and has to be shut down to resolve them and it ends up taking an extended time to do that.

These dealers are out there to make money not sit on inventory to make it look like Ford has no shortage of F150 pick ups. If you want to buy one the dealer will sell it and they will deal to move it.

I do not think any dealer is willing to sit on any inventory too long because they are paying interest on the loan for which the buy their inventory. A high volume dealer regardless of brand will move inventory out.

Big Al--That is my point there is nothing wrong with buying what you like even if it is more than what you need but to say everyone needs and wants a vehicle that has more capacity than what they need and that should be the only vehicle available is a waste especially if they don't want it. I don't need a crew cab truck with a tow package but I got it for 10k off sticker and the 4 wheel drive is something I use in the snow. My subdivision will not allow you to keep trailers in the driveway and I have no room for a trailer in my garage so a truck makes more sense. I use a pickup enough during the year for hauling stuff that it is still more cost effective for me to own versus renting. Somethings I will rent like a lawn aerator and a rear tine rototiller which I would use once a year (I don't want to store and keep up something I do not use that often). I am going to retire in the next 4 or 5 years and a truck is very handy for getting rid of stuff I no longer need or want. Yes I have had the Vets pickup stuff but there are many items I get rid of that even the Vets will not take. Also I have picked up things for friends that do not fit in an enclosed vehicle. I use the bed on my S-10 all the time so it is worth it to me to have a truck.

They all have tons of incentives right now. Dealer incentives vary wildly . I'll be trying out the 2015 F150 here in Scottsdale Az. on the 6th. of December. Got my pass last week.

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