Automakers are pushing to reopen their plants as quickly as possible in the wake of coronavirus, but given the economy’s precarious state—we’re in the midst of a rapid-onset recession, with recovery prognoses ranging from so-so to dismal—you might be wondering why. Surely no one is buying cars in this sort of climate, you’re thinking.
And you’d be correct: No one is buying cars. They’re buying pickup trucks.
In fact, in America this April, roughly 17,000 more pickups were sold than cars—the first time in history this has happened. As a Bloomberg report on the situation points out, a combination of factors conspired to bring the truck frenzy about at this particular moment; though the coasts quickly went into coronavirus lockdown, for example, pickup-hungry Middle America generally remained open for business a little bit longer, further tilting the sales balance in favor of trucks.
But this only served to accelerate a preexisting trend. Since early 2009, pickup trucks have been on a remarkably steady upward sales trajectory; cars, meanwhile, have been faltering since mid-2014.
Throw an almost overnight cessation of supply into the mix, and things are starting to get weird. Though plants in North America shut down in mid-March (some have retooled to produce medical equipment and protective gear), consumers haven’t stopped buying. Consequently, inventories of these lucrative vehicles are shrinking.
Per Automotive News (subscription required), “Because of the industrywide shutdown, light-duty pickup inventory in the U.S. could fall to 400,000 by the end of this month and plunge to 260,000 by midyear, according to J.D. Power. That’s compared with an inventory of more than 700,000 in May and June of last year.”
Some dealerships have already started running short of popular truck models; one dealer-group head said supplies could dry up entirely if new vehicles don’t start arriving by late June.
Again, there are several factors at play here. As Automotive News points out, inventories for certain vehicles like the Chevrolet Silverado were already light owing to last year’s GM UAW strike. Further, an increasing percentage of trucks are being purchased by buyers taking advantage of loans as long as 84 months; incentives like deferred payments and 0% financing, meant to keep sales from completely collapsing, seem to be working even as unemployment skyrockets. Meanwhile, monthly payments and amounts financed for new vehicle purchases are increasing.
To summarize, we have more people buying more expensive vehicles on ever-longer loan terms as we head into a period of economic uncertainty likely rivaling the Great Depression. Surely this will end well.
This is not meant to be a dig at pickup trucks specifically. The modern pickup is a remarkable machine; it is increasingly comfortable, efficient and roomy, and capable of doing more than the average owner will ever ask it to do. Using a new pickup as a daily driver demands far fewer sacrifices than it might have a few model generations ago. But they’re also expensive—and if it takes an 84-month loan to make the numbers work for you, you probably can’t afford the truck.
That’s true even when we’re not in the midst of a pandemic, staring down a long, unpleasant stretch of economic devastation of unknown duration. Toilet paper- and hand sanitizer-hoarders have found they’re unable to return their hastily acquired stockpiles. Time will tell if some of these pandemic pickup buyers wind up feeling the same sort of regret. Fortunately, a seven-year loan term gives them plenty of time to think back on all of their questionable financial decisions.
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