Pickup Sales As Economic Indicator

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Pickup Sales As Economic Indicator

Ever since we covered the auto industry in the 1990s, monthly sales data for large pickups has been one of our go-to measures of American small business health. Whether the end user is an oil field service company or the local arborist, they all park their big pickups at the end of the workday. For them, purchasing a new vehicle is entirely discretionary; they can always fix the old one and keep it running another year if they are worried about business conditions.

For the purposes of this analysis we include US dealer sales of the following:

  • Ford F-Series (the most popular vehicle in America)
  • Dodge Ram (now the #2 selling pickup, thanks to aggressive pricing this year)
  • Chevy Silverado/GMC Sierra
  • Toyota Tundra and Nissan Titan
  • Sales across these platforms total 2.4 million units, and at an average transaction price of $30,000/unit this makes for a $72 billion market. Yes, some of this is personal (rather than business) use, but the marginal buyer is most typically a business rather than an all-hat-no-cattle weekend cowboy.

With December’s light vehicle sales data now available, we can assess what our “Pickup Truck Indicator” has to say about US small business confidence:

#1: December 2019 sales were slightly below year ago levels:

  • Total large pickup sales were 1.3% lower than December 2018.
  • This was entirely due to a 9.4% decline in Chevy Silverado sales as the company ramps up the new 2020 model. Sales declines during high-volume model changeovers are common in the US auto industry, and the GM strike earlier in the year also slowed this process.

Bottom line: yes, December showed a negative comp but it was small and entirely explainable by GM’s model change.

#2: Despite all the economic uncertainty of 2019, large pickup truck sales were stable month-in/month out and posted a positive comp for the year:

  • Total sales rose 2.3% versus 2018.
  • The best monthly comp was +10.0% (August) and the worst was -4.5% (September), variability which is common enough around model year-ends.
  • Even though December unit sales were slightly down, both October (+3.5%) and November (+1.7%) were good.

Bottom line: by this measure, small business confidence was pretty stable all year and finished well, a good starting point for 2020.

#3: As the chart below shows, large pickup sales have been remarkably stable (and generally positive) since 2015.

  • There is the expected cyclical drop/recovery from 2009 – 2015 as buyers first deferred purchases and then slowly began to replace worn out vehicles.
  • The last 4 years show the same sort of slow but steady growth as the US economy as whole, with an additional bump from lower fuel prices (large pickups are, of course, less fuel efficient than passenger cars).

Bottom line: remember that no business ever needs to buy a new truck – maintaining an existing vehicle or buying used is always an option – and despite all the Wall Street recession scares over the last 4 years Main Street has largely ignored every single one.

Summing up: while large pickup truck sales may not get as much attention as more traditional economic measures, they tell us a lot about the state of the US small business economy. It has been solid for years, booked a good 2019, and shows little sign of turning lower as we start the new decade.