Italian Trucks, Farming, Russia, and the invisible hand
Turns out that automakers are making a lot more money then they did last year. Which is not really that surprising. But looking a little deeper into the numbers, it tuns out that Ford and GM are making a lot of their money through selling full-sized pickup trucks.
The big reason for this? Farming. The agrarian economy is booming, because of droughts in Russia and China which have lead to rising wheat and other commodity prices, they have made $9 billion more this year than at the same point last year. One of farmer's favorite pastimes is spending their hard earned cash on a new workhorse. The sale of pickup trucks is up 14% year over year, versus about 9% for the overall industry.
Why do automakers love trucks? Because along with SUVs and luxury cars, trucks make $$$. On big trucks, they can often make $15,000 or more... even though the "big 3" have figured out how to make money on cars (unlike the years of losses on cars they took in the 90's), $15,000 per transaction is still very needed margin.
Interestingly, Ford and the new F-150 (with its more capable engine and more masculine - and Silverado-copying looks) are the big recipients of consumer love, with sales up 31%. Chevy has done well too, with a 17% increase in sales. Surprisingly, the Tundra is also up 21%, surprising because it has not done well at all. Interestingly, what do farmers not like? The Dodge Ram, which is down 1%. Even more interesting because the Ram has just been redesigned and is in the middle of a major advertising campaign.
Turns out that farmers are ok with Japanese trucks, they just really dont like Italians.
The big reason for this? Farming. The agrarian economy is booming, because of droughts in Russia and China which have lead to rising wheat and other commodity prices, they have made $9 billion more this year than at the same point last year. One of farmer's favorite pastimes is spending their hard earned cash on a new workhorse. The sale of pickup trucks is up 14% year over year, versus about 9% for the overall industry.
Why do automakers love trucks? Because along with SUVs and luxury cars, trucks make $$$. On big trucks, they can often make $15,000 or more... even though the "big 3" have figured out how to make money on cars (unlike the years of losses on cars they took in the 90's), $15,000 per transaction is still very needed margin.
Interestingly, Ford and the new F-150 (with its more capable engine and more masculine - and Silverado-copying looks) are the big recipients of consumer love, with sales up 31%. Chevy has done well too, with a 17% increase in sales. Surprisingly, the Tundra is also up 21%, surprising because it has not done well at all. Interestingly, what do farmers not like? The Dodge Ram, which is down 1%. Even more interesting because the Ram has just been redesigned and is in the middle of a major advertising campaign.
Turns out that farmers are ok with Japanese trucks, they just really dont like Italians.
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