Ford idling more truck manufacturing facilities. Meanwhile GM is continually ramping up their midsize truck manufacturing and still unable to meet demand.

Makes sense, hard move trucks at an average selling price >40k when interest rates are climbing and suddenly all the free money dries up.

Still waiting for the local dealers to get the 2017 Canyon Denali and Chevy ZR2..no 2017's Colorado/Canyon's on any of the lots, and I live less then 10 miles from the plant

Makes sense, hard move trucks at an average selling price >40k when interest rates are climbing and suddenly all the free money dries up

@devilsadvocate

Where do you get your facts?

When was the last time you financed a vehicle? Interest is dirt cheap for those having good credit.

After years of near zero interest rates America's central bank recently added 25 basis points (one quarter percent) to their benchmark rate. Other lenders will only follow suit if they believe it.

The Fed tried to raise rates 25 BP around this time last year and it laid an egg. Detroit presently has a lot of inventory on dealer lots. That is the whole story in a nutshell.

If anything 2017 could be a better year for sales but it's much too soon to throw confetti. We'll see.

Sales slow down during Jan, Feb, March, and April and will not pickup till May. It makes sense to slow the production down and sell out of existing inventory.

Interesting, GM is getting rid of 3300 workers in Ohio and Michigan because it is eliminating production at 3 factories. GM is behind in the game because they kept heavy production riding way to long. According to automotive news "GM has to take more considerable action due to their high inventory. More inventory than Ford who was looking ahead at market trends.

I see a buyers market in the horizon.

I ordered my Ram in March of 2011 and took delivery 4 weeks later. Got 24.8 % off the sticker. Maybe this is the year to order another one. It runs in cycles. If your patience you can get a real good deal. I like to buy on my terms, not their's.

Yep, ditto on the buyer's market. Let 'em fall over each other increasing incentives for buyers.

RE : Still waiting for the local dealers to get the 2017 Canyon Denali and Chevy ZR2..no 2017's Colorado/Canyon's on any of the lots, and I live less then 10 miles from the plant.

That is weird Dave ,we had five 2017 Duramax Canyons, and 4 2017 Gas V6 Canyon's arrive lately. The Duramax powered Canyon diesels sold immediately, the V6 gas trucks have not moved. The Diesel is so much better to drive and do hard work so much better than the Gas engines, and get about 7 MPG better.. The diesel Canyon we use for shop truck is averaging 28 mpg, and we rarely get it out on the hiway. The new Gas with 8 speed are nice and have pretty good power, but don't have the torque to get loads moving like the diesel, and the gas average is 21 mpg.

Sales slow down during Jan, Feb, March, and April and will not pickup till May.

@Jeff S

I disagree.

Jan, Feb, March and April are the tax-refund-check months. If you had said things slow down after April 15, we'd have not argument. Go to jewelry stores, gun shops, any place where people are spending discretionary money, and the spring is a hot time till after April 15.

Meanwhile at Toyota, they cannot keep up with demand in a PULL system unlike the PUSH system of the big 3...

@papa jim--If you are talking about used vehicles I would agree but brand new vehicles do not move as well during the Winter, except maybe in Florida. Most people are broke after Christmas and New Years and are still paying bills. There have been so huge discounts on new vehicles during the Winter. Dealers and manufacturers are not going to offer large discounts unless sales are slower. Also the demand for new vehicles will eventually slow down as most who have held off buying since 2008 have already bought. Leasing and zero to low interest financing has helped keep the sales surge but even then there is only so long the period of loans can be extended. A typical loan is 60 months but there are some that go to 84 months. As with any economic cycle a boom never lasts, but hopefully this one will last a little longer.

Meanwhile at Toyota, they cannot keep up with demand in a PULL system unlike the PUSH system of the big 3...

@oxi,

I disagree.

Year-to-year sales have been sluggish for the Tundra, which still show an overall 3.5 decrease compared to 2015.

Cool story, but none of the five plants that GM is idling produce trucks or SUV's. GM is idling Detroit, Bowling Green, Fairfax, Lords town and Lansing, all produce cars. Gm full size truck plants are Flint, Fort Wayne and Silao. Mid size come from the Wentzville plant. - -http://www.autonews.com/article/20161219/OEM01/161219860/gm-plans-to-idle-5-u.s.-plants-in-january-to-adjust-supply

@Jeff S

no disrespect but you got into the weeds a bit. From now till April 15 is a very short while. Just about 100 days.

The dealers are all yelling for more trucks and big SUVs because they sell. Dealers are never content with the status quo.

there may be some places around the country where people arent feeling flush, but with easy financing and cheap terms, people will buy. this is not a long term discussion about the economy. Just a 100 days. Tax refunds are coming. Trucks will sell.

@oxi: Keep in mind the single USA Toyota truck plant produces two trucks, so it is expected it would be at capacity.

What's kinda funny about this is Toyota is ramping up production in Mexico to product more Tacoma trucks; with declining sales on the horizon, is this a good move?

Toyota just can't capitalize on the light truck market as they are too slow to change.

@NoQDRT

Unless we have a crystal ball it's pretty hard to tell what will happen in the mid size truck market during 2017.

Last December nobody would have predicted that Nissan would sell so many Frontiers in 2016.

Same for Tacoma. I've been immune from the Tacoma's charms for a long time but I see them everywhere.

Their latest sheet metal (lipstick) and other minor upgrades seem to have worked because they continue to outsell the rest in that space.

I've never really understood why Nissan and Toyota even try to compete in the half ton trucks but their smaller trucks are competitive. And they will outsell Honda, again in 2017 unless I really miss my guess.

The automotive industry is continually evolving. The writing has been on the wall for the demise of mid and full size cars for some time now and it is accelerating. Next will be the full size half ton pick-up truck market that takes a hit. However it will not decline at the rate that cars have, at least not in the immediate future. People don't need full size trucks to pick-up groceries, tow a boat to the lake, drop your kids off at school, pick-up a new big screen TV or even a new refrigerator for that matter. These things can all be done with a midsize truck that you can find a parking space for at the hardware store and can easily park in your garage.

And as the truck sales fall, the big 3 minus 1 still cant rely on their small cars to sell at a profit and in quantities to float them through times of difficulty or change. Just like all the other previous downturns, hickups, slow downs, changes in emissions but at least now taking welfare is perfectly acceptable and shameless (according to GM/Fiat fans) thanks to the precedent established by GM and Fiat.

So it dosent matter what anyone does or the market does... its free money for failure and profit when its easy.

@papa jim--Those who are buying new vehicles are buying pickups, suvs, and crossovers. Cars are piling up on the dealer lots and many companies are idling plants or converting them over to trucks. There are no shortages of new vehicles on any of the dealer lots in N KY or Cincinnati and the discounts have been very very good. One of the few vehicles that is not discounted as much as some of the others are the Colorado/Canyon twins which there are not a lot of on the dealer lots and also the Tacomas.

If you want a full size pickup you can for the most part find what you want at a very good discount. Chevy, GMC, Ford, and Ram dealers around me have been offering sizable discounts and anyone wanting or needing a full size pickup can pickup a good deal with low or no interest. If anything you can get a much better deal on a new truck than buying one with a few years on it especially with the financing available. If one wants a midsize or compact car the discounts are very very good. The inventory on many dealer lots has been piling up so it is doubtful many dealers are placing large orders from the manufacturers until they sell some more inventory. The manufacturers are cutting production of trucks because the dealers are not ordering as many.

Usually where I live new vehicles sales start to go up around Memorial Day and increase through the Summer. Many unless they need a new vehicle will get by with their existing vehicles through the Winter especially with snow and the corrosion from salt and melting chemicals used on roads. Florida, Texas, and many Western States would not have the snow and road chemicals. Many who live in the Rust Belt want to get every last bit of use out of there vehicles before they trade them for a newer ride. The tin worm is a reality in the Rust Belt and brings many vehicles to any early grave. A reasonably priced and good used vehicle will always be in demand during the Winter especially if it has a decent body especially for those whose ride is on its last legs and an early refund can be used as a down payment.

There are no shortages of new vehicles on any of the dealer lots in N KY or Cincinnati and the discounts have been very very good.

@Jeff S

Are you referring to discounts? Your comment says the discounts are good, but how would you know?

Keep this in mind: unless you know the actual dealer cost, you cannot know the discount. Unless you work in that dealer's office and have access to that data, then you're only able to compare the offer versus the MSRP.

Which may, or may not be a discount at all.

Consumer Reports claims that their "service" allows you to know what the actual dealer cost is. I don't believe that.

In fact, actual dealer cost (which has to include any rebates and other favorable consideration) is a closely held secret and CR and the rest of us are guessing.

One way to beat them at their game is to offer MSRP price on the truck you want and make them pay YOUR price on your trade-in vehicle.

The credit you receive for your trade-in will need to include enough padding to offset the higher cost of paying MSRP on your new truck, but at least you'll be in the drivers seat throughout the negotiation process.

Just like all the other previous downturns, hickups, slow downs, changes in emissions but at least now taking welfare is perfectly acceptable and shameless (according to GM/Fiat fans) thanks to the precedent established by GM and Fiat.

So it dosent matter what anyone does or the market does... its free money for failure and profit when its easy.
Posted by: Clint | Dec 29, 2016 10:46:52 AM

HA HA, you must be too young to remember. Ford pioneered the bailout in the 1980's. (Yep, you can add that to your "Ford did it first.." list of claims)

---

...the government issued the largest recall in automotive history to Ford Motor Company, recalling 23,000,000 vehicles for defective transmissions that killed 200 people and injured more than 1400. We were just pulling out of a severe recession, and President Reagan had just been sworn in.

The CEO of Ford went to Reagan and said if you make us recall virtually every Ford on the road, we will have to file bankruptcy. No company can withstand the recall and repair of 23,000,000 vehicles.

President Reagan did not want to go down in history as the president who took down Ford Motor Company. At the time it looked like Chrysler would also file bankruptcy. Reagan revoked the authority of the federal government to issue mandatory recalls. They could issue “safety advisories” but not recalls. Instead, Ford agreed to mail out, via U.S. Mail, 23,000,000 stickers to put on Ford dashboards warning people that the transmissions in their cars could cause injury or death.

I worked at the transmission plant that made many of the faulty transmissions, with the full knowledge of top management at Ford. When people were burned to death and killed by cars jumping into reverse, I decided to one day write a book about how those transmissions were made, and how Ford runs auto plants.

----

https://asavagefactory.wordpress.com/2009/05/16/ford-got-the-largest-government-bailout-in-history/

So it dosent matter what anyone does or the market does... its free money for failure and profit when its easy.
Posted by: Clint | Dec 29, 2016 10:46:52 AM

@Clint

Did you read Wilson Sr's reply?

Ouch! that has to hurt. Get your mommy to put a little salve on that, or maybe just rub it with an ice cube for a few minutes. Probably gonna leave a mark!

@papa jim--That may be true but it seems that there are more deals to be had. What you state is good information and should be done. It is better to have the information about the dealer cost before you walk into a dealership. It is better not to be in a position where you are desperate to get a new vehicle. Better to take the time and do the research. I do think much of the large discounting is manufacturer rebates that help the dealers to move inventory so that they will order new stock. This is true of much of retailing especially clothes where the manufacturer gives retailers allowances to move last season's merchandise out to make room for next season's merchandise. Need to move the inventory to get new orders.

@Jeff S

there is a big difference between the garment business and the auto business.

A retailer selling apparel expects to sell 80 percent of this season's clothing at or near a 100% markup. It's called "keystone" in that trade but I don't know why. But they all do it.

The rest is discounted at the end of the season.

Auto retailing of new cars and trucks works on super thin margins. It's one of the main reasons that dealers are so careful about cost of goods vs. retail price. Car dealers are thrilled to make 10 percent on a car or truck.

It's often a lot less. Any inventory remaining beyond the time allowed by the dealer's business plan will be wholesaled through specialty businesses that offer cash for unsold cars. This is prevalent in used cars but I can't see why a dealer wouldn't sell a new car that's on his inventory to a wholesaler.

papa jim--Profit margins are much bigger on the more expensive higher optioned vehicles especially the full size high trim pickups and suvs, but yes there are not the markups on vehicles as there are on clothes and jewelry. My point with the comparison with the clothes is that manufacturer allowances are made to retailers in order to get retailers to order new stock. The manufacturers customers are the retailers and if retailers are not moving inventory then they will not order as much from the manufacturer. Got to sell a certain amount of product to keep the assembly lines or plants in operation otherwise you have to slow production down and/or store unsold inventory which costs money. In 2008 there were manufacturers that were storing thousands of new vehicles where ever they could find the space. This is what happened in 1979 with Chrysler where they literally ran out of space storing unsold inventory.

As for new vehicles sold to wholesalers it seems to be one way of getting rid of less popular and slower selling vehicles especially since the dealer is paying interest on the loan. Sometimes a buyer can negotiate a deal on a less popular vehicle but dealers try to stock more popular vehicles that are higher trim and better optioned to lessen the chance of getting stuck with inventory that sits too long on the dealer lots.

I would hate to be an FCA dealer trying to get rid of those excess Chrysler 200s, Dodge Darts, and Fiat 500s that have been languishing on the lots even when the Chrysler 200s and Dodge Darts have been discontinued and have not been manufactured in months. There might be many of those hitting the wholesalers and going to used car lots.

As you have stated before it is better to do your research before you go into a dealer. At least have an idea what you want and what you can afford to spend. For most it is easy to get sucked into how much can you pay a month for a vehicle. The finance manager trying to sell you that extended warranty, paint protection, and a few extra items that can be rolled into the loan for not that much more a month. That is when you need to read all the fine print and get out the calculator to compute the real cost.

@Jeff S

Dealers don't borrow money to buy cars. They get cars from the factory or the distributor on friendly consignment terms. The dealer has the car or truck on the sales floor for 30 to 60 days before the first payment is due. Like 30 day net.

After that, the distributor gets paid as if the car was already sold. And it's often the case that the car HAS been sold. When things are going well, you sell the car after 10 days and sell another once. You can flip that money several times before you have to pay the first penny to the distributor.

That's the sweet part. The best part is selling used cars. There the margins are HUGE. New cars, small margin. Used? HUGE.

You may find a used car dealer who only sells used cars, but you 'll NEVER find a new car dealer who only sells NEW cars. Never.

@papa jim--I was always told that the dealer had a revolving line of credit on the inventory. I do know that the profit on used vehicles is much greater for the dealers. I also know that many new car dealers go to auctions to get many of their later model used vehicles--not all their used stock is from trade-ins and if a trade-in is too old, too much mileage, or it is in poor condition it is wholesaled off. I also know that most dealers have a floor plan.

There are articles on TTAC about the decreasing sales of mid and compact cars and such cars as the Chrysler 200 and Dodge Dart have much higher than average days in inventory. Crossover, suv, and truck sales are where the demand is at and many plants that are manufacturing cars are either temporary idled or are being shut down and converted to truck, suv, and crossover production.

It will be interesting to see what happens in 2017. Will vehicle sales still manage to increase or will they level off? Eventually they will level off and then decrease and then go up again. Nothing lasts forever.

Gas prices will go up again and then people will switch to smaller efficient vehicles and then gas prices will go down again and larger vehicles will sell. I would rather get a vehicle that meets my needs and keep it for many years. It takes many years to recoup the cost savings from a more efficient vehicle and I will not replace a vehicle just to save a little money on fuel. If I need a new vehicle I will look for a more efficient one that meets my needs and something that I will be satisfied to keep for a number of years.

I remember the Arab Oil Embargo of 1973 when people were rushing to get rid of their large less efficient cars for compact and subcompact cars. Those who did that took a real bath on their late model large cars. There were a few used car dealers buying these late model large cars at low prices. Less than a year later those large cars were selling well. Everything is cyclical. Basically the same thing happened again during the Iranian Hostage Crisis in 1979. People were getting rid of their large cars and less than a year later they were buying large cars.

ford and ram are idling plants and gm is at full capacity so gm is the best ram and ford need a midsized truck or at least a full size truck with a 3 foot bed

I'll say it again car companies aren't that stupid. Truck demand remains high at worst. Decrease supply and raise prices.

"... Decrease supply and raise prices."

@Juanfo

Presumably in that order...

Raising prices is irrelevant in a market where none of the Big 3 actually advertise their prices. For at least fifty years the Big 3 have advertised their MSRP which is a meaningless figure. Nobody ever bought a pickup for MSRP.

In order for raising prices to be effective at all, GM and Ford would need to reduce dealer inventories in a very big way. Then they would need to reform the way they sell to their dealerships because the dealers have come to expect the annual nonesense of have Spring Sales, Fall Sales, GOING OUT OF BUSINESS SALES!!!, and all the other bogus advertising schemes they do each year.

The public is long overdue for a system where they can buy and make shipping arrangements online. For that to work the dealers will need to find a new way to add value to the transaction so that customers will keep coming back.

In the meantime the customers don't trust the dealers (or Detroit) and they're watching the new players on the scene (Tesla for example) and the cool ways that someone at a shopping mall can configure and order their new vehicle without ever going to a car lot. Stay tuned.