Is the Ford F-series' 27-year reign at the top of America's sales charts about to end?
The pickup truck commercial circa 2009 has all the subtlety of a peeing Calvin sticker. In a series of ads for the Chevy Silverado, Howie Long appears to argue that purchasing a Dodge Ram (which has a heated steering wheel, ideally suited for those with manicures) or Ford F-150 (featuring a "man step" that allows for easier access to the truck bed) will turn you gay. Chrysler, seemingly more willing to court bankruptcy than be associated with effeminacy, is pushing its Dodge pickup with the "Ram Challenge," a Web reality series helmed by Top Gun's Tony Scott that pits firemen, cowboys, contractors, and soldiers against one another in some pursuit that features both trucks and explosions. (Memo to creative: It might be easier to prove your product's masculinity with spokesmen whose occupations aren't cribbed from the Village People.)
In this automotive pissing contest, the ads for the Ford F-150 betray the least status anxiety. Sure, there are the requisite cracks at hand models and math nerds, but the Denis Leary-narrated spots don't stoop to product endorsements from guys with T-shirts helpfully labeled "MILITARY." The F-150 ads have a more inward focus, emphasizing that the new pickup does "things no truck has ever done before," like connect to the Internet. Why doesn't Ford take potshots at the competition? The same reason that McDonald's doesn't talk back to Burger King—it's the alpha dog. Ford F-series pickups were the top-selling vehicles in America in 2008, the 27th consecutive year that the F-series has held that title. Still, Ford shouldn't be celebrating too heartily. It's looking increasingly likely that its amazing streak won't last another year.
John DiPietro, who's written a comprehensive history of the Ford F-series for Edmunds.com, says the F-150 was an instant hit upon its 1975 debut. The midsized pickup hit a marketing sweet spot between Ford's bare-bones, entry-level F-100 and the expensive, it-can-tow-your-elephant F-250. The F-150 could handle most work-vehicle duties—lugging tools and bales of hay—yet still maintained a smooth ride, as it lacked the stiff suspension of the heavy-duty F-250. It was the launch of the F-150 that catapulted the F-series to the top of the charts, and the pickup remains Ford's most popular model, accounting for about 70 percent of F-series sales. DiPietro says that Ford also distinguished itself in the mid-1970s by offering the most options across its entire truck line—an extended cab model with extra cargo room and jump seats for the kids, for example. While the competition eventually caught up featureswise, the legendarily fanatical brand loyalty of pickup owners has helped the blue oval maintain its lead.
Ford earned the top spot by jumping ahead early and never disappointing its faithful customers. This first-place position isn't just a point of pride; it's an economic imperative. The ascendance of the truck and the SUV was the best thing to happen to American automakers since the internal combustion engine. One reason for Detroit's prolonged success in the large-vehicle field is a 25 percent tariff on many foreign-built trucks, an unintended consequence of a 1960s-era provision designed to protect the American auto industry from a Volkswagen invasion. * With so few manufacturers in the game—and with gas prices low after an early-1980s collapse—customer demand far outstripped the available supply. That simple equation persisted for decades, and it transformed Detroit into Trucktown, USA. This shift was good for business: According to David E. Cole, the chairman of the Center for Automotive Research, the net profit on a full-size pickup in 2007 ranged between $4,000 and $5,000. The net profit on a small car was virtually nil.
The problem with a truck-based empire is that gas doesn't always stay cheap. As prices spiked above $4 per gallon in May and June, the F-150 was overtaken on the monthly sales charts by a bunch of puny sedans with good fuel economy: the Toyota Corolla, Toyota Camry, and Honda Civic. With the 2008 F-150s failing to sell, Ford had to delay the launch of the 2009 model for two months while it pushed the previous year's trucks off the lot at deep discounts, cutting into those $4,000-per-vehicle profit margins.
Doug Scott, the marketing manager for Ford's truck division, says that in his 31 years at the company he's never seen a segment take such a big hit so quickly. In a few months, he says, the market share for full-size pickups in America plummeted from 14 to 15 percent to 9 percent—not good news for a company in which light trucks have accounted for around 60 percent of sales in recent years. Scott says the great truck swoon of 2008 wasn't caused solely by potential new buyers flinching at the pump. The hefty gas prices also drove down the values of trucks that were on the road—even people who wanted to buy new trucks couldn't afford them, because trade-in prices for used pickups were in the gutter.
According to Scott, Ford's research has shown that truck customers were less scared by the absolute price of gas than by the dizzying rate at which it increased. The numbers for the tail end of the year support his contention. As prices at the pump stabilized, then dipped, trucks once again ran over small cars to reach the top of the sales charts.
If you look at absolute numbers, though, the F-150 and its brethren are in a free-fall. In 2005, the first time that gas prices inched over the $3 per gallon barrier, Ford sold more than 900,000 F-series pickups. Last year, the company moved 515,000. In the same time period, sales of the Corolla, Camry, and Civic have remained flat. The F-150, then, isn't losing its sales lead because more people are buying sedans. It's because fewer people are buying trucks. Indeed, pickup sales were so dreadful overall last year that Ford actually increased its lead over Dodge and Chevy. Unless things pick up, and fast, the F-150 will get lapped by the Camry in 2009.
Ford—which lost $14.6 billion last year—wishes the F-series' troubles were as simple as expensive gas. There's also the problem that trucks are generally more expensive than cars. Times are good in Trucktown when people are buying pickups they don't really need. In a recession, there will be an inevitable falloff in purchases by the "I'm cool if I drive a truck" demographic. Even worse for the automakers, the economic crisis has cut into the base of customers who buy trucks they do need—if a contractor can't get any work, he's not going to need a new F-150 to lug around his tools.
The blue oval, too, no longer has the same grip on the American truck buyer. With Japanese companies building more trucks that aren't subject to the 25 percent tariff, Ford now has to compete against the likes of the Toyota Tundra pickup and the Honda CR-V crossover SUV. Cole, the Center for Automotive Research chairman, says that repurchase rates for pickups at one time ran as high as 60 percent. According to R.L. Polk's 2008 buyer loyalty figures, the leading full-size pickup came in at a mere 33 percent—and that was the Chevy Silverado, not the F-150. (GM, which makes both Chevy and GMC pickups, has been giving Ford a run for its money of late. As recently as 2005, the F-series nearly outsold the Chevy Silverado and GMC Sierra combined; in 2008, the Silverado and the Sierra beat out the F-series by a whopping 120,000.)
These certainly aren't the end times for the American pickup, but Detroit is dealing with some strange new realities. Scott now trumpets the F-150's best-in-class fuel economy. And though Ford set itself apart 30 years ago by offering the most styles and options, the company has reduced costs by cutting back on configurations. Will a new marketing plan and streamlined production be enough to save the venerable Ford pickup? They'll certainly help, but Ford needs more than a small boost right now. It needs a man step.