Truck sales pick up as home starts move upward

Randy Shepherd figured it was time.

Shepherd, a residential contractor, bought two new Chevrolet Silverado pickups, one in December and the other in March. The construction season was about to kick off.

“We were busy last year, but things are really starting to pick up now,” said Shepherd, owner of Shepherd Enterprises of Independence, Mo. “Last time we bought a truck was nine years ago, so we wanted to update our equipment.”

Shepherd is not alone in his spending decisions, and their purchases of pickups are signs that an economic recovery is starting to surface.

Housing starts were up nationwide in the first quarter compared with a year earlier. The increased building activity has contractors buying more full-size pickups. Auto industry analysts say trends in the large pickup truck market get overlooked on the coasts but are a key gauge in the middle of the country.

Ford Motor Co., which leads the industry in pickup sales, has added overtime to its truck production line at its plant near Kansas City.

March is a particularly telling month, experts say.

Two months ago, sales of large pickups in the U.S. jumped 25.9%, slightly outpacing the 24.4% in overall vehicle sales. The last time the full-size truck segment beat industrywide sales was in 2007, according to Edmunds.com, a popular auto-buying website.

“One always equates March truck sales to the housing economy, and even the economy as a whole,” said Ivan Drury, an analyst with Edmunds.

Drury expected April vehicle sales to post a seasonal drop compared with March sales. Still, Ford Motor Co. and General Motors Co. said last week that April’s numbers were much better than in April 2009.

Sales for Chevrolet and GMC full-size pickups were up a combined 20%.

Ford’s numbers were even stronger. Dealers nationwide sold 42% more Ford F-series trucks in April compared with the same month last year.

Neither dealers nor analysts are predicting that pickup sales are returning to the glory days of the 1990s through the mid-2000s. But the comeback in full-size trucks has created optimism about the months and even years ahead.

“Most people don’t understand that pickup trucks are a crucial part of our economy, as it relates to construction, agriculture and many other things,” said Erich Merkle, president of Autoconomy.com, a Grand Rapids, Mich., consulting firm. “If you have to have a pickup, there really isn’t a substitute. I expect pickup trucks to do well over the next two to three years and outperform the overall [automotive] market.”

If Merkle is right, that bodes well for auto dealers as well as the agriculture and construction industries. But it’s also a boon to domestic automakers, which have always dominated the profitable pickup truck market even as Asian auto companies have made inroads with popular passenger cars.

Since gas hit $4 a gallon in spring 2008, Ford primarily has run only one F-150 shift at its Kansas City-area plant while operating three shifts to build the Ford Escape and Mercury Mariner compact sport-utility vehicles. Although Ford has no imminent plans for adding a truck shift, union officials are optimistic as sales rebound.

Ford posted a $2.1-billion profit for the first quarter, its fourth consecutive quarterly profit. Ford dealers are touting the fact that the company is the only domestic automaker not to go through a government-aided bankruptcy reorganization.

“Obviously things are getting better now, and our pickups are doing very well,” said Brad Hewlett, principal with Bob Allen Ford in Overland Park, Kan. “But our business has been very good since last summer,” when GM and Chrysler got bailed out.

Nationwide, Ford trucks have led the comeback, with F-series sales rising 26% in the first quarter.