Marketplace Sees Small Truck Sales Decline

By David Piestrzynski

With the small-truck segment declining steadily in the new- and used-car markets for more than five years, some analysts say manufacturers will soon ax poor-selling models.
No. 1 on the hit list is the Ford Ranger.
According to AutoData Corp., Ranger sales declined to 92,420 units in 2006 from 330,000 in 2000. As of May, Ford dealers had sold 35,598 Rangers.
Catherine Madden, a senior analyst at the Detroit-based research firm Global Insight, said Ford will remain in the small-truck segment.
But she said her company forecasts Ford will place the Ranger on hiatus at the end of 2008.
“They’ll likely import something from Thailand to compete in this segment in 2012,” Madden said.
The lack of demand for small trucks is also showing on the used side.
Manheim is seeing fewer light trucks roll through its lanes.
According to Tom Webb, Manheim’s chief economist, compact pick-ups represented 3.2 percent of the company’s auction sales in 2006, down from 5.8 percent in 2002.
He said consumers are starting to see the price line blurred between compact and full-size trucks.
“Obviously, everybody wants bigger cabs,” Webb said.
“As for price point, people feel they’re better off with a full-size truck.”
According to a study by Edmunds.com, if you look at the prices, a 2007 Ford F-150 costs only $4,000 more than a 2007 Ford Ranger.
Ford has no official plans for discontinuing the Ranger.
“We’ve made no such announcement and you will see the 2008 Rangers coming out soon,” said Ford’s Truck Communications Manager Wes Sherwood.
According to Kevin Collins, the chairman of Ford’s Dealer Council, Ford is more likely to cut production rather than kill the Ranger altogether.
“They’ll probably trim it back,” he said. “If you lock in production at a certain number, you’re not going to end up building a glut of vehicles.
“Overcapacity is where they get killed from an expense standpoint.”
Ford has admitted it will be altering the Ranger’s production. Sherwood said the manufacturer will be shutting down its St. Paul, Minn., production plant where the pick-up is built. A shutdown date has not been set.
Other manufacturers are also seeing less demand for compact pickups.
In 2005, there were 128,359 Chevrolet Colorado’s sold, but the manufacturer has failed to hit that mark since then. According to AutoData Corp., the total fell below 100,000 in 2006 and as of May, 34,265 Colorado’s have been sold.
In 2000, Dodge dealers sold more than 177,000 Dakotas, but sales have declined. In 2006, Dakota sales had fallen to 76,098, according to AutoData Corp. The trend for Chrysler appears to be continuing into 2007. As of May, the manufacturer had sold 24,343 Dakotas.
“It’s clearly a shrinking segment, but the Ranger still has good resale value,” Collins said. “Like many vehicles, it has a built-in value in the used-car market.”
He said while sales are down on the new-car side, used Rangers have been easy to move at Bill Collins Ford in Louisville, Ky.
“There are still a lot of people who need the bed for storage and hauling,” Collins said, “but not everyone needs as much space as a full-size truck provides.”
These vehicles are easy to recondition, Collins said.
“Typically, you just have to replace the bedliner and it’s ready for resale,” he said.
The Ranger could survive because it acts as a gateway product for Ford, Madden said.
She said many consumers have purchased Rangers and later purchased an F-Series truck.
There is some good news for the used compact truck market.
Ricky Beggs, managing editor of value guide Black Book, said while sales at auction are down for small trucks, prices are up.
Since January, Black Book shows small trucks have increased in value as much as $400 on a three-month moving average.
“I think the higher price is attributed to the perception that these get better gas mileage (than full-size trucks),” Beggs said. “The truth is that if you put a 6-cylinder or a 5-cylinder engine in a Chevrolet Colorado, the gas mileage is not that different.”
Edmunds.com shows that the 2007 Ford Ranger gets up to 26 m.p.g., while the F-150 can get as high as 20 m.p.g.
According to Tom Kontos, ADESA’s vice president of analytical services, the high fuel cost could eventually increase consumer demand, and subsequently the demand for dealers to keep small trucks in stock, but as long as quantity at the auction is down, prices will likely remain firm.