As Detroit’s automakers continue to struggle with the economic disruption caused by the coronavirus epidemic, their short term fixes might soon be coming back to hurt them. A new report by Automotive News states that dealerships across the country are running low on their stocks of pickup trucks, a result of the incentive programs the automakers began rolling out last month. With production facilities still halted, the upcoming pickup truck shortage may cost the Detroit Three tremendously.
With a record number of Americans out of work and stuck at home under the strict guidelines being instituted across the country, auto sales have plummeted. In order to try and salvage whatever business is still out there, the Detroit Automakers turned to their financial divisions to come up with something. What we got are finance deals that are unprecedented in the industry, with Ford, GM and FCA all offering up to 7 years of zero percent financing for qualified customers. While many Americans simply don’t have the extra cash to burn right now, plenty still went out to take advantage of these deals. According to Automotive News, these deals may prove to be problematic as vehicle supplies continue to stay limited.
Pickup trucks are some of the most popular vehicles on the road and automakers best money makers. They are also becoming tremendously expensive, which is what makes these finance deals so appealing to prospective buyers. But the supply that exists at this point won’t last long with the level of demand. According to J.D. Power, the inventory of light-duty trucks in the states could fall to 400,000 by the end of May, which dwarves in comparison to the 700,000 in that inventory this month last year. By the middle of 2020, that figure could fall as low as 260,000 units.
This is a problem for both the automakers themselves and their respective dealer networks. A depletion of the current stock will only continue to make it harder for the automakers to meet demands once the economy is back in action. The UAW strike last year was a factor in GM’s struggle to get product out in 2020, including the C8 Corvette. Buyers were left with allocations that were unable to be filled due to the backlog. The situation with the virus has obviously persisted longer than the labor dispute, and will continue to do so for the foreseeable future.
So it appears that the United States is about to slip into a pickup truck shortage, as no agreements have been reached yet between automakers, legislatures or their employees as to when they can return to work. Depending on how long it takes to get these production facilities back online, the longer this truck shortage could go on.