Economists look at many tea leaves as they try to determine the health of the economy. One of the most important surrounds vehicle sales, and more specifically pickup truck sales, which are tied to the construction industry. And as last month's sales rose 18 percent, the auto industry is betting big on a real estate rebound.
It's arguable that the Ford F-150 is the most important vehicle to come out of Detroit since the Model-T. It's also built where many parts for the old Model-T were made in Dearborn, Mich.
Standing between two separate assembly lines, the plant's manager, Brad Huff, explains how a truck comes together.
"The frame's built upside down; it gives us easy access," he says. "So, then the frame is built up and turned over. Then it comes here on this line where we pick up the tire and wheel. And then we wind up at the marriage station where the body meets the frame."
The F-150 has been the best-selling truck for 36 years in the U.S., and it's been the best-selling vehicle of any kind for 31 years. They build 7,500 trucks in the Dearborn plant per week. There are almost 600,000 types of permutations of the pickup, whereas cars usually have a couple hundred at most.
There are color, moon roof and trim options for the Ford pickups, and the list goes on. "I know it's hard to explain that it comes out to 600,000, but when you put all those different combinations together, it comes right down to it," Huff says.
Now Ford is rumored to be introducing a new version of its pickup truck — the company had a concept vehicle premiering at the Detroit Auto Show. Doug Scott, marketing manager at Ford, won't say exactly when a new truck is coming, but he does say something big is on the way.
"Housing is the missing element," he says. "Housing is now coming back. We've seen over the last four, five months improvement in housing ... and all that is a bellwether and a great indicator for the full-size pickup business, so we're really optimistic."
While all U.S. auto companies are showing increases in car sales, it's a rebound in pickup trucks and real estate that really gets Detroit car executives excited.
"For every Ford F-series that's sold, they're making anywhere from [$6,000] to $8,000 in profit," says Alec Gutierrez, an analyst with Kelley Blue Book. "Whereas your average Fusion or Escape or Focus, they might be making [$800], maybe $2,000 in profit, at most."
Each of the carmakers is poised to capture any uptick in new housing construction. Ram just released a new truck, General Motors is coming out with two of them, and Ford executives are winking about something big in the works. Gutierrez says even the small housing gains can mean big money, truck-wise.
"As housing starts to improve and as commercial real estate starts to improve and just construction in general, that's where you really start to see strength in the pickup truck market, as small businesses have to get these trucks so they can haul equipment and people back to the job sites," he says.
Before the auto bailouts and the economic collapse, almost all the profits from the Big Three came for trucks and SUVs. That has changed, especially for GM. But the pressure on GM is cooking in a different way than Ford. It's relaunching its Chevy Silverado and GMC Sierra this spring.
Kenn Bakowski, marketing manager at GM, says that automaker's new trucks are the most important product launches in the company's history, because GM has something to prove.
"So as you look for a company that's on the rebound — definitely on its way back — this is a big sign," Bakowski says. "That we can be competitive here and that we can win here — that's very important to us."
This is a race essentially between Ford and GM, with Ram a distance third and Japanese trucks bringing up the rear.
"Will we outsell our competitor in terms of full-size pickups? That's our goal. We did in January. Are you looking for me to throw down the gauntlet? I think I just did," Bakowski says.
Ford and Chrysler say bring it on. And so the truck war begins.
9(MDE1MTIxMDg0MDE0MDQ3NTY3MzkzMzY1NA001))
Transcript
AUDIE CORNISH, HOST:
Now, here's a more tangible indicator of the health of the American economy: vehicle sales, and more specifically, the sales of pickup trucks. Trucks are tied to what's going on in construction, and last month sales were up 18 percent. As NPR's Sonari Glinton reports, the auto industry is betting big on a real estate rebound.
SONARI GLINTON, BYLINE: You could the argument that the Ford F-150 is the most important vehicle to come out of Detroit since the Model-T, and it's built on the same grounds as the old Model-T in Dearborn, Michigan.
(SOUNDBITE OF MACHINERY)
GLINTON: Standing between two separate assembly lines as long as the city block, the plant manager, Brad Huff, explains how a truck comes together.
BRAD HUFF: The frame's built upside down, and it gives us easy access. So then the frame is built up and is turned over, then it comes down here on this line where we pick up the tire and the wheel. And then we wind up at the marriage station where the body meets the frame.
GLINTON: The Ford F-150 has been the best-selling truck for 36 years in the U.S., and it's been the best-selling automobile of any kind for 31. They build 7,500 F-150s here every week. And there is this crazy statistic - there are almost 600,000 ways you can have this truck outfitted.
HUFF: We got color mixed in. We got moon roof, nine moon roofs. We got 40/60 seats, and it goes right down to different trim levels interior. So I know it's hard to explain that it comes out to 600,000. But when you put all those different combinations together, it comes right down to it.
GLINTON: Now, Ford is rumored to be introducing a new version of its pickup truck. The company had a concept vehicle at the Detroit Auto Show. Doug Scott with Ford won't say exactly when a new truck is coming, but he does say something big is on the way.
DOUG SCOTT: And housing is now coming back. We've seen over the last four, five months improvement in housing starts, house prices, more construction, and all that is a bellwether and a great indicator for the full-size pickup business, so we're really optimistic.
GLINTON: And there's reason why this pickup in the housing industry has Detroit executives smiling. Trucks have much better profit margins than cars.
ALEC GUTIERREZ: For every Ford F-series that's sold, they're making anywhere from six to $8,000 in profit, whereas your average Fusion or Escape or Focus, they might be making 800, maybe $2,000 in profit at most.
GLINTON: Alec Gutierrez is an analyst with Kelley Blue Book. Each of the carmakers is poised to benefit if the housing sector does come roaring back. Chrysler just released a new version of the Ram, General Motors is coming out with two new trucks, and there are all those Ford executives winking about something big in the works. Gutierrez says even small housing gains can mean big money, truck-wise.
GUTIERREZ: Pickup trucks, at the end of the day, are really used for work, for hauling back and forth, for taking things back and forth to the construction sites. So as housing starts to improve and as commercial real estate starts to improve and just construction in general, that's where you really start to see strength in the pickup truck market as small businesses have to get these trucks so they can haul equipment and people back and forth to the job sites.
GLINTON: Before the financial crisis and the auto bailouts, almost all the Big Three's profits came from trucks and SUVs. That's changed, especially for General Motors, but the pressure is still on. GM is relaunching a Chevy Silverado and GMC Sierra this spring. Kenn Bakowski is with GM. He says his company's new trucks are the most important product launches in the company's history because, he says, GM has something to prove.
KENN BAKOWSKI: So as you look for a company that's on the rebound, definitely on its way back, this is a big sign that we can be competitive here and that we can win here. That's very important to us.
GLINTON: The Ford F-150 has been eating your lunch quarter after quarter, year after years. It's...
BAKOWSKI: And what's your question? Will we outsell our competitor in terms of full-size pickups? That's our goal. And we did in January.
GLINTON: This...
BAKOWSKI: Are you looking for me to throw down the gauntlet?
(LAUGHTER)
BAKOWSKI: I think I just did.
GLINTON: Ford says bring it on. And so the truck war begins. Sonari Glinton, NPR News.
(SOUNDBITE OF MUSIC)
CORNISH: And we want to let you know about a breaking story. President Hugo Chavez has died, that's according to Venezuela's vice president. Chavez was 58 years old. We'll have more on this story later this hour.
(SOUNDBITE OF MUSIC)
CORNISH: You're listening to ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.
300x250 Ad
300x250 Ad