Trucks come off the assembly line at GM’s Chevrolet Silverado and GMC Sierra pickup truck plant in Fort Wayne, Indiana, July 25, 2018.
John Gress | Reuters
Consumers flocked to pickup trucks with 0% financing offers and deferred payments amid the coronavirus pandemic, even as overall auto sales plummeted last month.
The Big Three Detroit automakers took their biggest share of the market last week since 2006, according to J.D. Power. the combined market share of General Motors, Ford Motor and Fiat Chrysler was 51% to end the week. The Detroit automakers typically represent about 39% to 40% of the U.S. retail market, which excludes sales to fleet customers such as the government and businesses.
While the growth in market share is expected to be temporary, it’s a “good win” for the Detroit automakers in a very challenging market, according to Tyson Jominy, vice president of data and analytics at J.D. Power.
“It’s certainly helpful from a health perspective for the time being,” he told CNBC. “They’re certainly moving a lot of high-profit trucks even if the incentive load is fairly high.”
Incentives on pickup sales reached a record average of $7,200 heading into the final days of last month, according to J.D. Power. That’s up $500 from the pre-coronavirus high. Despite the rising discounts, such pickups carried net transaction prices of $42,000 and are among the most profitable vehicles sold by automakers, the firm reports.
GM and Fiat Chrysler on Wednesday reported overall sales declines for the first quarter, however they’re sales were better than many rivals without pickup trucks and special financing offers. Light-duty pickup sales heading into the final two days of March were down 27% compared to a 61% for the overall industry, according to J.D. Power.
“Of course, it is on a very low volume basis, so it’s not as impactful as if it were a market share gain under normal circumstances, but nonetheless … the Detroit 3 are doing pretty well, relatively speaking,” said Thomas King, president of the data and analytics division and chief product officer at J.D. Power.
Fiat Chrysler’s Ram pickup was able to stay in the black with sales rising 7% in the first quarter. GM’s truck and SUV sales were up 6.7% in the quarter, led by a 27.3% increase in sales of its highly profitable full-size Chevy Silverado and GMC Sierra pickup trucks.
2019 Ram 1500
Ford is scheduled to report its first-quarter sales on Thursday.
Both GM and Fiat Chrysler last month offered well-qualified new car buyers 0% financing for 84 months and deferred payments of 90 days. Ford offered up to three months of deferred payment, and the company will pay for three additional months – allowing six months of payment assistance.
Nearly half of sales during the last week of the month were financed with 0% financing for 84 months, according to J.D. Power.
U.S. vehicle sales are expected to have declined about 35% to 40% in March, which is typically one of the best months of the year for automakers. Final U.S. vehicle sales for March and the first quarter were not available Thursday as automakers continue to report results.