Profit on Pickup Trucks

[MSCH]

Of course options increase profits-however they have costs to the manufacturer as well.

maybe... some of this stuff is so cheap at their level the price differential is basically non existent.. but the profit margin isn't... does carpet cost any more for them than a rubber floor? does a plain plastic door panel cost alot less than a plastic door panel with some shiny bits?
do two colors of paint really cost more on their end. Aluminum rims versus steel? etc..
you want all terrain tires, they charge you 900 bucks... but you know they don't pay 900 dollars more for them, probably more like 20..

 

[MSCH]

In the early 70’s it was common to pull what would now be a small travel-trailer with a full sized Oldsmobile or Buick with a 455.

or a 350. those were the days, 2 adults and 4 kids in a large US car, windows rolled down, dog has its head out the window and the rear bumper dragging the ground with a18 foot bumper pull trailer on the back, heading on the family summer vacation.

 

[CKN]

maybe... some of this stuff is so cheap at their level the price differential is basically non existent.. but the profit margin isn't... does carpet cost any more for them than a rubber floor? does a plain plastic door panel cost alot less than a plastic door panel with some shiny bits?
do two colors of paint really cost more on their end. Aluminum rims versus steel? etc..
you want all terrain tires, they charge you 900 bucks... but you know they don't pay 900 dollars more for them, probably more like 20..

I think you need to remember if a "shinny bit" costs .50 cents extra and you sell a half million units a year -it's a tidy sum. I think your valuations are off and over simplistic. JMHO.

 

[RedSpider]

About 3-4 years ago pre-pandemic I was talking to my nephew who was working (still does) at one of the big GM conglomerates in town and mostly sells pickups, he said is average sale was about $5000-$6000 (dealer) profit. How much GM was making per sale I dont know. How that translates into todays insane car market I dont know either, I wouldnt doubt that number is much, much higher now. I havent seen him in a while to ask, he married a nut and I dont want to be around her any more than I have to.

I've been out of the business too long now to know what todays numbers are like.

 

[MSCH]

I think you need to remember if a "shinny bit" costs .50 cents extra and you sell a half million units a year -it's a tidy sum. I think your valuations are off and over simplistic. JMHO.

yeah, I am probably being conservative and the profit margin is higher.

 

[MSCH]

yeah, I am probably being conservative and the profit margin is higher on the hi end option packages..

 

[andrew_j]

this article seems to indicate $10k/truck for GM last year:

GM could reap billions by building combustion trucks and SUVs through 2035

General Motors has signaled in a series of recent announcements on plant retoolings that it plans to keep its largest and most profitable combustion trucks and SUVs in production longer than expected - another 10 to 12 years, according to analysts and suppliers.

www.reuters.com

 

[PF52]

Well, Honda and Toyota sell a lotta sedans... Just sayin'.

That's true, but even Accord and Camry sell at a rate about 1/2 what they did 10 or 15 years ago. And that is despite the discontinuance of almost all of their competition.

 

[JeffKeryk]

That's true, but even Accord and Camry sell at a rate about 1/2 what they did 10 or 15 years ago. And that is despite the discontinuance of almost all of their competition.

I get your point; SUVs have become very popular. But I think your numbers are off; the COVID years are outliers.
I think you are proving my point. Honda Toyota can sell sedans; what's wrong with their competition?

To borrow from another current post, I liked the Ford Fusion I rented and was pretty surprised when Ford discontinued it. Turns out it was a Mazda in Ford's badges. We recently rented a Mazda 3 and found it a great driving car as compared to the Civic/Corolla cars. I was pleasantly surprised. I would strongly consider one.

 

[4WD]

I get your point; SUVs have become very popular. But I think your numbers are off; the COVID years are outliers.
I think you are proving my point. Honda Toyota can sell sedans; what's wrong with their competition?

To borrow from another current post, I liked the Ford Fusion I rented and was pretty surprised when Ford discontinued it. Turns out it was a Mazda in Ford's badges. We recently rented a Mazda 3 and found it a great driving car as compared to the Civic/Corolla cars. I was pleasantly surprised. I would strongly consider one.

Nobody was buying them - did you ?
(we had a 2014 Fusion Hybrid for 157k)

Don‘t forget the Koreans dumped hard on the sedan market …

 

[PF52]

I get your point; SUVs have become very popular. But I think your numbers are off; the COVID years are outliers.
I think you are proving my point. Honda Toyota can sell sedans; what's wrong with their competition?

No, it's not because of Covid. The numbers have trended significantly down since 2014 (Accord) and 2015 (Camry), except for a few random upticks here and there. Logic would suggest that their sales would go up in the absence of the Taurus and Impala and Fusion and Focus and Cruze and Regal and Lacrosse and whatever other models have been discontinued during that time, but they haven't. Now we're losing Maxima and Mazda 6 so the trend continues.

 

[JeffKeryk]

No, it's not because of Covid. The numbers have trended significantly down since 2014 (Accord) and 2015 (Camry), except for a few random upticks here and there. Logic would suggest that their sales would go up in the absence of the Taurus and Impala and Fusion and Focus and Cruze and Regal and Lacrosse and whatever other models have been discontinued during that time, but they haven't. Now we're losing Maxima and Mazda 6 so the trend continues.

COVID hurt production for almost every car company, so those years are statistically outliers.
There is no doubt SUVs are popular and have consumed much of the sedan market. But Honda Toyota sedan sales are not half of what they were. In fact, the Corolla has been the #1 seller for years, only recently dethroned by the Model Y. But they sell a ton of them.

The sedans you named have depended on rental car fleet sales (low profit) for years, not end user sales.

 

[MSCH]

the SUV and the CUV have taken the place of family cars, station wagons and minivans.
quietly and invisibly.
pay attention when you drive somewhere and count cars and you can see it.
SUV's/CUV's fill the parking lots and you never even noticed.

I just got to thinking what is in my neighbors yards .
next door 1 Nissan Rogue and a car.
after than a pickup truck and another Rogue.
after that a Ford Escape.
next house is redneck country, five pickup trucks and a Challenger.
across the street from rednecks is a Mazda CUV and 2 sedans.
next house coming towards me is a Escalade.
so out of 6 houses 5 of them have at least one SUV.

 

[Hermann]

When I used to venture in "Johnson County, KS" in the Bright Red F-150 to go to Traders Joe's and to eat Gumbo at a nearby Seafood Restaurant, Many times I was the only pickup in Trader Joe's parking lot. It is a "well to do" suburban area. People just don't drive trucks much there and people stare at you, and then look at your Missouri plates. All they see is "The Clampett's" on/in the truck.

 

[drtyler]

Don‘t forget the Koreans dumped hard on the sedan market …

That's a polite way to put it. I suppose their strategy worked if the idea was to reduce competition, but the GM and Ford small cars were much better rides.

 

[MSCH]

That's a polite way to put it. I suppose their strategy worked if the idea was to reduce competition, but the GM and Ford small cars were much better rides.

dontcha think the average buyer of a cheaper small car is only interested in the purchase price.
I think of vehicles like a Kia or Hyundai as being disposable.

 

[odotb]

I think the percentage manufactures make on their autos is like the formula for Coca Cola. Very few people know the answer and they ain't talking.

 

[SeaJay]

Jeff-tell us what these 2 - 1/2 ton dinosaurs got gas millage wise......

13 MPG without towing as long as you are going downhill with a tail wind. Cut it in half when towing anything bigger than a small yard trailer.

 

[fdcg27]

I am one who bemoans the declining number of sedan offerings since that's what I personally want to drive.
OTOH, the smaller CUVs are quite inexpensive, deliver good fuel economy and offer loading options with their tall two-box design that you don't get with a sedan when an owner needs to move something larger than a couple of checked bag size pieces.
I do think that there are at least a couple of makers who better hope that the current optioned up truck craze doesn't end abruptly.
All it'll take is a recession and while the widely forecast recession of 2023 hasn't happened we'll still see one sooner or later.

 

[GMBoy]

I can answer the question with pretty good accuracy regarding the GM large SUV's made at the plant I just recently retired from. A Tahoe/Yukon will average 10-12k profit per truck. A Denali is approx 13-14k and an Escalade is right about 15-18k+