Pickup Truck Sales Indicate Economy Is On The Mend

The pickup truck is the backbone of the U.S. auto industry. Ford's F-series trucks account for about half of the company's profits. This month, sales reached their highest point in five years. Higher truck sales could be an indication small businesses are beginning to reinvest in their companies.

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So the government is beginning to get a General Motors out of its portfolio and we're beginning to learn who will own the company instead. One of the early buyers is a company in China. SAIC, the Shanghai Automotive Industry Corporation, says it bought one percent of General Motors. GM and the Chinese company are already doing business in a joint venture.

Now when it comes to making profits, auto companies still depend a lot on trucks - pickup trucks, to be more specific. This month, U.S. pickup sales reached their highest point in five years. Pickup sales improving.

NPR's Sonari Glinton looks at what small truck sales mean for the overall economy.

SONARI GLINTON: Trucks are big, a big part of the profit picture for car companies. That's probably why GM, Ford and Toyota spend so much money on their truck commercials.

(Soundbite of commercials)

Unidentified Man #1: Silverado is so sturdy and strong that it makes try the heavy trucks easy.

Unidentified Man #2: Chew on that. This is the future. This is the new F150.

Unidentified Man #3: Holy smoke, available in the full sized Tundra. The truck that's...

GLINTON: Trucks are only about 11 percent of the auto market. But in Ford's case, which had the biggest market share, they accounted for about half the profits.

To get the feel for the truck market, you have to go where trucks are sold. In this case, northern Virginia.

Mr. SAM BUTLER (Sales Consultant, Koons of Manassas): I'm Sam Butler, and I work at Koons of Manassas. And my title is sales consultant.

GLINTON: Make no mistake, Sam Butler is a salesman. And with his silver hair and gracious smile, he could sell the devil an oven, but he specializes in GM trucks.

Mr. BUTLER: All of them look nice. I mean you can take and dress a truck up to where you'd wonder if it is a truck. You know, you put big wheels on it. You can put running boards on it. You could put a chrome package on it.

GLINTON: That adds to your bottom line right?

Mr. BUTLER: Oh yeah, all that adds to your bottom line. Yeah, it's not free. Yeah, but that's where a fella decides, do I need that or do I not need it? You know.

GLINTON: Butler says what a truck buyer needs and wants tells you about the economy. Because it tells you about what small business owners, farmers and entrepreneurs are doing.

Mr. BUTLER: Say a fella realizes his dream in life and he can start a company. Well, all of sudden he realizes well I need a truck, maybe, to help me out here to haul things around.

GLINTON: In the years since the economic collapse, fewer people have been starting businesses and buying trucks. Vehicle sales last year were the lowest in the U.S. since 1982. And pickup sales were especially depressed. The small businessmen who were Butler's customers have been holding out on upgrading their trucks. But this year, customers began returning.

Mr. BUTLER: When they feel comfortable about the economy, then that gives them, you know, the feeling inside that well hey we can take the next step now. And the next step might be to secure a truck for their business or whatever.

Mr. GEORGE PIPAS (Sales Analyst, Ford): The economy is still weak, but at least people have come to the conclusion that it's not going to get much worse.

GLINTON: George Pipas is a sales analyst at Ford. He watches truck sales for the company. Pipas says when pick up sales were at their worst, that was a sign of just how bad the economy had gotten.

Mr. PIPAS: The small business owners which buy a lot of pickup trucks we're deferring their purchase to preserve cash and keep their business afloat.

GLINTON: And they kept deferring and kept deferring. That is until this year. Now they're buying trucks again, but only because they are replacing worn out old ones. Replacing a truck for an existing customer is not as profitable as luring in lots of new customers to buy trucks for the first time. Dealers say, during the peak of the housing boom five years ago, new faces were coming into the showroom all the time. And a lot of them were driving away in their first trucks. Again, Ford's George Pipas.

Mr. PIPAS: Keep in mind that in 2004 and 2005 two and half million pickups were sold in the United States. And this year about half as many will be sold.

GLINTON: So this spike, you don't see this as like a return to the salad days.

Mr. PIPAS: No, no, not anywhere - no, no, no.

GLINTON: Pipas and economists say that if pickup sales were to skyrocket, that would be a sign of a genuine turnaround. But if sales remain at today's levels, that may mean small business owners merely feel that they won't hit bottom, again.

Sonari Glinton, NPR News.

(Soundbite of music)

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