Pickups could become too pricey for many
Average cost of full-size truck is $48,377, up 48 percent from 2008
Truck enthusiasts Ernest Johnson and Mike Herron couldn’t be more different.
Johnson, 80, lives in Pontiac, Michigan. He retired from General Motors in 1999 where he drove a tractor-trailer delivery truck for 35 years. Herron, 65, lives in Durant, Oklahoma, about 50 miles north of Dallas. He owns four businesses and is a real estate investor who has driven BMW sports cars for the past decade.
Yet each paid a large amount to buy new 2019 GM pickups.
Johnson shelled out nearly $60,000 for his 2019 Chevrolet Silverado Z71, he said. For that price, he will keep it a long time, saying, “I won’t have a choice.”
“The price is a little high, but with all the technology on it, I guess it’s worth it,” he said. “But, in the future, it’s something a lot of people won’t be able to afford.”
The prices people are paying for pickups have steadily risen over the past decade, pushing the trucks further and further out of reach for average consumers. In fact, some full-size pickups can cost more than $100,000.
Edmunds’ data shows, through September, the average transaction price for a full-size pickup is $48,377, a 48 percent boost from 10 years ago and a 19 percent hike from 2013. For that price, a person could buy a MercedesBenz or BMW luxury sedan.
“A 48 percent increase in price is the highest price increase for that time period out of all vehicle categories,” said Ivan Drury, senior analyst at Edmunds. “Even at $45,000, it prices a lot of people out.”
According to data from Kelley Blue Book, in September 2013, the average transaction price for a full-size pickup was $41,680. This September, it was $48,369. Yet the expectations of most pickup buyers fall far below what they actually end up paying, according to data from Cox Automotive, which
owns Kelley Blue Book.
Most buyers expect to pay $26,699 for a new midsize pickup, Cox data show. But, the average transaction price through August 2018 is actually $33,275. Similarly, the expected price of a full-size pickup is $38,529, but the average transaction price for the year through August is $47,987.
Even on the more basic pickup models, the surge in prices over the years is driven by added bells and whistles to the trucks as well as consumers increasingly using them as family vehicles instead of strictly for work. Low gasoline prices help drive demand for pickups, supporting higher pickup prices, analysts said.
“There are consumers who can afford the bare bones basic vehicles at $30,000, but once you’re shown an option like a ventilated seat versus a cloth seat and it’s 90 degrees outside, it becomes a very compelling argument to say yes,” said Drury. “Ten years ago, comfort packages weren’t offered on trucks.”
Taking a look at the median purchase price rather than the average purchase price, the numbers land a little differently, although still climb higher. The median purchase price for a pickup nine years ago was $31,000. It rose to $37,000 in 2013. Today, it is $43,000, said Alexander Edwards, president of consultancy Strategic Vision in San Diego.
Meanwhile, the median household income of the truck buyer also has been on the rise, Edwards said. Through August, that metric is $100,305 a year compared with the median household income of a general new vehicle buyer at $95,355, he said. But in 2009, the median household income for general new car buyers was $83,516 versus median household income of pickup buyers, which was $76,660, he said. The U.S. Census Bureau puts the median household income in the U.S. at about $59,000.
“Trucks are definitely not priced in the range of your normal U.S. buyer,” Edwards said. “For some, it’s even possible to have a BMW and a full-size truck in the garage.”
Car dealer Charlie Gilchrist, owner of Gilchrist Automotive in the DallasFort Worth area, worries that pickups will soon be unaffordable to many of his customers. “In 1988, I sold my first pickup at $20,000 and I thought, ‘Man, who could ever afford this?’ ” Gilchrist said. “Now, they’re $60,000, $70,000, $80,000 ... We’re actually in the luxury business at those prices.”
So what will ultimately bring down the price of pickups? Simple supply and demand. Demand is high among people who seek the luxury or utility of big trucks. And with gasoline prices staying at relatively low prices, that demand won’t dissipate, analysts said.
A return to consistently high gas prices above $4 to $4.50 a gallon would shift consumers to the more affordable car segment, possibly driving down the sticker prices for pickups. Or a downturn in the economy could lead to lower prices, Edwards said.