Full-size trucks have always been a dependable segment when it comes to selling efficiently and driving profits for Original Equipment Manufacturers (OEMs). For example, the Ford F-150 has been the best-selling truck in America for a long time. In the first quarter of 2023, four out of five models in the average inventory are full-size trucks.Read more: Full-Size Pickup Trucks Not Selling Efficiently
Selling Efficiency is Down For Full-Size Trucks
Models such as the Ford F-150, Ram 1500, GMC Sierra 1500, and Chevrolet Silverado 1500 are the leaders when it comes to full-size trucks in the marketplace. However, despite their large presence, these trucks are not selling efficiently compared to other segments. According to the Cloud Theory Inventory Efficiency Index, a score of 100 means that relative supply and demand are in balance. A score over that means that a make or model is moving more than its fair share. A score below 100 means that steps need to be taken to either boost demand or reduce supply. Currently, the full-size truck segment has an Inventory Efficiency Index score of 74.8, which is the lowest of any segment in the marketplace. There are several factors responsible for this score.
Long Term Factors
One of the long-term factors contributing to the low score for the full-size truck segment starts with the spike in gas prices. In fact, the segment has shown a low score below 100 since the third quarter of 2021. This is also when gas prices went up to over $3.00 per gallon as the national average. Previously, the trucks segment was over 100 for five consecutive quarters. The other long-term factor contributing to the low score is a move toward high-end trims with much higher price tags than before. Trims with price tags over $55,000 account for over 66% of the inventory of full-size trucks in 2023. This is compared to 17% only two years ago. The problem is that the lower-priced trims are still selling faster.
Short Term Factors
The short-term factors for the low sales efficiency of full-size trucks include supply chain issues and ramped-up production. With parts and chips in short supply, manufacturers have focused on producing more units of the high-priced models, which will yield more profit. However, consumers have always been more interested in the lower models of full-size trucks, so they are either delaying their purchases or turning to other segments like SUVs. This has resulted in a huge increase in high-priced trims for full-sized trucks, but the units are not selling quickly at all. The segment continues to go down and other segments, such as the large SUV category have gone up. In other words, increased production in a time of high fuel prices and inflation has caused a surplus of trucks that aren’t selling. Manufacturers with truck-heavy lineups will need to rebalance their supply by either raising demand or slowing down production.
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