Remember how we used to lament how Detroit was too truck and SUV heavy? Ford agrees. They think people buy way too much of the big stuff, and it will come back and haunt us. At least in Canada Ford thinks that way. The Calgary Herald reports that David Mondragon, chief executive of Ford Canada, has said that a combination of high incentives, low oil prices and pent up demand have created a short term boom for truck sales. “That’s a segmentation shift that’s not healthy for the environment, not healthy for the economy and long term, we need to see that shift go back to a more balanced approach,” said Mr Mondragon. That’s right. He said that the boom in trucks cannot last and that Ford must be prepared for the when that happens. Wow. A Detroiter (well, a VERY northern Detroiter) is actually suggesting that they may have to prepare for when the party ends?
It’s easy to see where Mr Mondragon is coming from. According to the article, “last month, light trucks accounted for 55 percent of all vehicles sold in Canada, compared to 45 percent of sales of passenger cars. That’s an exact reversal of the ratio from 2008, when oil prices reached $145 a barrel and fuel-efficient vehicles were sought after.” At the time of this writing, a barrel of oil is trading at $76.45 on the Nymex. Now that may be over half of the $145 per barrel peak, but couple that with the peak oil report published earlier and Mr Mondragon is probably right to say brace yourself. Those electric Focuses better arrive soon. Provided the electricity powering them comes from non-fossil fuel based electric…
I don’t think he is referring to trucks in general, but to the “unnecessary” trucks for people that just use them for the image. In all countries there is a demand for trucks to do stuff. and those trucks typically are not the fancy-schmancy ones sold in the US. and not 50% of all vehicles are trucks. Maybe 10-20%.
It seems only in countries with cheap fuel (US, Canada) there is that huge truck fashion that will have the affects he is talking about.
If the truck has steering wheel heaters, leather seats, video entertainment and heated cupholders, it probably is not for the tough guy who works outside on a power pole during a blizzard, it is for a wallstreet banker that thinks he is a cowboy :) If the truck has interior that is shiny and one is afraid to put a tool on to not scratch it, then it is not a truck for people who actually need a truck. And don’t get me started on coil springs….
That said, if I worked on power poles during blizzards, steering wheel heaters and heated cupholders might be on my shopping list…
Having lived some time in the US as a kid. And now living in my home country Brazil, I’ve always had a soft spot for trucks. Have really no idea how much of the market is made up by trucks and SUVs, but it would surely be over 10%. And people buy them in the country because of need and in the city because of need and image. And if people had more money I think our market would be made up by 30 to 35% trucks and pickups. The SUV craze is still in high swing here.
Though of course most of our trucks and SUVs are much smaller than the American kind. Most are in fact car based. The youth in the city is in love with their small car-turned-into-pickup Stradas, Saveiros and Montanas.
I myself like trucks. Though I really can’t stand SUVs. My wife has of late become enamored to the Chevy Captiva (a crossover thingy). I put it down whenever I can. I got the huge pickup thing out of my system when I owned a Ranger (yes it’s huge here). A joy when I bought it and another joy when I sold it. Good pickup but after having it for almost 3 years I was more than ready to get back in a car and experience their much superior dynamics again.
Having said that though, one of the small car based trucklets still hold my attention. Not now, specialloy as we’re thinking of starting our family. But I can definetely see one in my future. Specially adter the kids are older and that dream house in the country has become a reality. Then I’ll be able to enjoy the image while at the same time have a justification for owning one.
Hummm, wonder what Fiat et al will be offering 15 or 20 years down the road? And yes, I’ll tick on all the unnecessary luxuries (after all it’s a far away dream and one can still dream, right?
Saying that our fuel is “cheap” would suggest that it is subsidized. Our fuel is just closer to market price because we do not have as many taxes on it as some other countries do.
I think that it would be very arrogant for me to tell someone else what they can or cannot drive based on whether I think they “need” it or not. As long as people are willing to pay for their own fuel, I do not care what type of vehicle they buy.
I am not sure how some of these Ford executives sleep at night if they believe that their products are literally destroying the planet. They should immediately stop selling all pick-up trucks or maybe restrict them to customers that require them for their job. It is the only ethical thing to do although I am not sure how the stockholders would feel.
Oil and gas are subsidized by tax breaks the industry receives in equipment depreciation, and cost write-offs. Also incredibly favorable terms for mineral leasing set by the arcane Mineral Leasing Act of 1920 that is the golden goose of the oil/gas industry and has never been effectively revised to provide market based returns to our Gubernment which is also us.
All companies depreciate equipment and right off expenses. Do the oil companies get additional depreciation or right offs? What percentage of our gasoline is made from oil that is taken from land leased from the government?
Oil is subsidized in about every way you can imagine – from the artificially cheap drilling leases, the special tax provisions, the billions in outright tax breaks and research grants as well as a host of other measures. However, nobody seems to get nearly as upset about it as they do for the GM bailout.
“Oil and gas are subsidized by tax breaks the industry receives in equipment depreciation, and cost write-offs”
Not exactly, Kramer. A business “write-off” is not a cheque from the government. It is a reduction in the amount of income they must report for tax purposes, to reflect their cost of doing business. If a $10,000 piece of equipment must be replaced every ten years, for example, then that company earns $1,000 less every year as far as the government is concerned. This is how all companies are taxed, not just oil companies, and any reasonable person would agree that it is not a subsidy.
A better example of a “subsidy” enjoyed by oil companies might be the U.S. military providing security for their tankers in the Persian Gulf. But then again, if we paid the amount of taxes they pay, we would probably be lobbying our local representative for special attention too.
Lower cost domestic mineral leases and tax benefits (or lack thereof) only relate to domestic production; most US oil is imported. Auctioning mineral rights to the highest bidder would erase the subsidy complaint, but don’t be upset if the Russians or Chinese are the highest bidders and ship “our” crude overseas. Changing the tax structure for oil companies only makes sense if we do so (flat tax) for all companies.
Keep in mind that we already have a few economic problems domestically; few would argue that increasing regulatory burdens and raising taxes (lowering incomes) will improve our economy…unless you aspire to be the regulator or the taxer.
Unless the oil companies agree to pay for the military expenses, oil is subsidized by the taxpayer.
The single reason to be in Iraq (or in that area in general) is not the beauty of sand dunes, but oil. but that expense to secure the fuel supply is paid by taxpayers.
and let’s not forget the cost that we all pay in terms of the environmental damage that is done by the oil industry and the associated health costs.
“Unless the oil companies agree to pay for the military expenses,”
They sorta do. Exxon alone pays $30 billion in taxes to the U.S. government every year. http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion
“let’s not forget the cost that we all pay in terms of the environmental damage that is done by the oil industry”
BP and Exxon are not the ones driving your 200-horsepower sedan 40 miles to and from work every day. Let’s lay responsibility where it belongs… with the consumer.
“They sorta do. Exxon alone pays $30 billion in taxes to the U.S. government every year.”
Which is less than 5% of the 2010 US Department of Defense budget.
“Which is less than 5% of the 2010 US Department of Defense budget.”
4.4% to be exact. I’d say that one single company paying 1/23 of the nation’s total defense budget is pretty damned significant, considering that there are 500 of them on the S&P large cap index alone. And let’s not forget the 300 million citizens, many whom pay no taxes at all because someone else does it for them.
It isn’t that trucks are evil. Focusing on one part of your product portfolio while letting the rest rot is evil.
Absolutely true. That could be the basis of an entire “Detroit Deadly Sins” series on TTAC. Give examples of how GM, Ford, and Chrysler were capeable of spitting out world class trucks while half-assing everything else. That is the thing that I think fires up most of the so called “Detroit Bash-ers” on this site. Detroit proved it could build quality products when it mattered, when it came to sedans and small cars, they largely didn’t give a crap.
Right now we are paying over a 1.00 a litre {roughly 4.00 U.S.$ a U.S gallon} or 80 to 90 a fill up for a full size truck, ouch!
Does it stop Canadians from buying trucks? Here in suburbia 30% pickups and big SUV’s. Out in farm country more like 70%.
Personally, I don’t care. But I got better things to do with my money than feed gas to a pick up truck.
I’ve got better things to do than feed gas into anything, so years ago I switched careers to work from a home office. Now, instead of driving a tin can long distances every day until my butt goes numb, I enjoy local runs in a 4,000-pound, leather-appointed SUV which burns less fuel in a year than the average Prius.
Size, as they say, doesn’t matter. It’s how much you drive it.
I’m sure Ford of Canada is just crying over this. All the way to the bank.
The right business approach is to cash the checks while big vehicles are selling, without forgetting that Ford needs to keep a complete set of competitive products, big and small. North American automakers have been caught with their pants down by this fact three times in 35 years.
Sounds to me like Mr. Mondragon plans not to have it happen a fourth time on his watch. Since spending money on vehicles that aren’t the hot sellers of the day is hard, he is seeking support from his employees, supplier base, and customers.
The truck and SUV thing outside of legitimate business/farming needs is nothing more than unnecessary machismo that the USA has incorporated as “The American lifestyle is not negotiable”.
Be prepared for the law of unintended consequences should a combination of increased costs/carbon limits force Americans to buy fewer trucks and opt for less expensive cars.
They may just use their new found money savings to fulfill their ‘unnecessary machismo’ through other means like firearms, fatty beef, donating to traditional political causes and so forth. Then you’d have to enforce further so-called legitimate needs tests and punishments.
Maybe you’d better re-think your fantasy of coercing consumption behavior.
Weight and distance is part of the equation that can be used to ascertain the amount of fuel used going from point P to point T.
The heavier the vehicle and length of trip affect mileage.
Heaven forbid we simplify things with something basic such as using division, amount of fuel consumed and number of miles driven while using V amount of fuel.
We must think bureaucratically to be effective in our new, improved politically correct non-torsion bar world.
Yes!!!!!!!!
We, the People, the Herd, need a ton-mile tax to assist in quelling the excess use of natural resources to ensure future farmers of America do not have to hitch up Bessy to plow the “lower 40.”
Bessy would likely rebel and refuse to cook supper, churn the butter, beat the clothes on the rock by the creek and mend the torn clothing or, even worse, refuse beget any more spawn to assist with the chores leaving our future farmer friend with nary a thing to do on those long now lonely nights huddled in that little shod shanty on the plain.
It is our cumulative duty to ensure farmer Brown et al have unhindered access to gas and/or diesel so as to allow unhindered use of tractor-pulled plows.
Enact that ton-mile tax so those HUGE trucks owned by Herd members filling some bizarre psychologically-driven desire to portray himself as a BIG rough tough macho Alpha Male idiot MAY be compelled to engage what is assuredly an itty bitty brainlet and purchase a transportation device that sips rather than gulps gas or diesel or whatever combustible liquid is used to propel the assuredly noisy behemoth down the motorway.
Conceivably, another method to ration fuel is via price. Screw the so-called “free market.”
Some basic research devoid of implanted indoctrination can find a MULTITUDE of instances within the USA where the oft-used but seldom evidenced “free market” has NO applicability, especially when funneling wealth from the masses of commoners to the deserving ones higher up the pyramid-shaped socio-economic hierarchy are involved.
Feed your masters, fools!!!!!!!!!!!!!
Ascertain a price level that maximizes the desire for vehicles sipping fuel yet does not too badly harm the commoners, a growing percentage of the populace AND the working-poor and use fuel tax that slides on a scale to keep fuel prices close to the price that compels the purchase of fuel efficient vehicles.
Details can be worked out, fine-tune as needed.
Perhaps rebates via yearly tax forms to the lower income folks performing the taska that society needs done to keep the tubbos’ faces filled with cheap burgers and fries and the crops picked and a horde of other tasks where pay rates have lagged the cost of living for decades.
A multitude of factors involved that assuredly could be worked out to obtain the desired results causing minimal economic harm.
Just do not concern ourselves with those fragile egos that DEMAND the “right” to lord over others while obtaining some perverse form of likely sexual gratification by exhibiting to the world their LOUD, HUGE, obnoxious fuel guzzling conveyance that performs no real duties other than sating a little boy’s desire to be like John, a big BIG man who ended up at the bottom of a mine while the wannabe BIG truck driving boys are likely headed for their feminine cozy cubical.
Or something akin to all that. Our beloved bureaucrats will assuredly be able to accomplish the goal with a few hundred thousand pages of incomprehensible gobbledygook that enriches the few masters at the top at the expense of We, the People.
Obey.
Does anyone know, is the so called “hummer tax exception” still in place. Put in place by the previous administration after lobbying by Detroit , it was possible to write off up to $50K in taxes on an agricultural vehicle. An agricultural vehicle was designated as something that weighed over 6000lb.
A lot of self employed business people bought these things just to get the writeoff and many new SUV’s were specifically modified to make them heavier than they should be. Add more content (weight) in other words.
A total stupid law that made no sense.
I assume it has been repealed but knowing how Washington works I wonder if that’s true
The writeoff was not put into place by the previous admininstration, it was put into place during Gerald Ford’s administration (in 1975). Also, I am not sure what you mean about the vehicles being modified to make them heavier. GVW, which the exemption is based on, is the total allowable weight of a vehicle, including passengers, cargo, and trailer tonque weight, not the static weight of a vehicle. Yes, it still exists, but has changed over the years. http://en.wikipedia.org/wiki/Section_179_depreciation_deduction
An example of the “added weight”would be the design of the Fore Excursion. It was intentionally made heavy enough to get it into the medium weight class, and by extension, it no longer was averaged into Ford’s CAFE requirement. It was also now eligible to be depreciated completely in one year. The unintended consequence is that all Americans get to help pay for a business owner to drive a gas guzzler. The medium weight class exemption was to help a business owner buy a new say, bucket truck. Instead, it was used for that business owner to buy transportation for his wife. Its for reasons like this that I have no problem with subsidies for hybrids.
WWJD? He’d ditch his hauraches for an F-150. Probably a Lariat extendo cab…
Seriously though, why hate ppl that drive 1/2 tons just because they can. You tend to see alot of empty cargo beds but you also see alot of empty back seats on cars. I’ll bet my cargo bed shows more wear than 89% of passenger car back seats. Besides, 20MPG vs. a 30MPG Corolla (yuck) is a small price to pay. F it, totally worth it in my book.
As long as it is not illegal to breathe and exhale poisonous carbon dioxide and it is still legal to ride my dirt bikes in the desert, I’ll still have a need to have an F150 Super Crew to enjoy and drive. It is just so hard to fit my XR650R into the back of my Lincoln LS!!
Trucks are a necessary part of life and automakers need to continue to invest in them. However, the percentage of recreational truck ownership is as fickle as the fashion that drives it and can leave auto makers with excess capacity when the market shrinks (which it does when gas prices go up). To make things worse, the excess supply takes years to reduce as many contractors and businesses buy used trucks in order to keep costs down.
That’s not to say that Ford should cancel the Raptor or their ridiculously priced Harley Davidson edition F-150s but they need to ensure that they don’t overextend or be caught overexposed to the truck market when its in decline.
Here in Western Canada, I don’t see the truck for personal use thing going away anytime soon. Distances are long, an aging road infrastructure is pretty rough on lighter vehicles, and outdoor recreation of all sorts is enabled or made a lot easier with a truck. The kinds of trucks we buy may change though. I am constanly amazed by how many people buy diesel dually 1 tons when a smaller truck would do. Right now diesel is about a buck a litre (call it $4.00 a US gallon), a graet deal of which is tax. for a while it was nearly $1.50. It didn’t change peoples habits around here much.
Ford itself, along with GM and Chrysler, are moving a lot of trucks this year due to ther fact that they are putting a lot of money on the hood. “employee pricing” “free hemi” and “up to $9000 cash back” have been common themes at the domestic dealerships this season. If you look closely though, almost all of it is applied to trucks. Unless you want a Cobalt or an HHR or one of Chryslers many dubious cars, the deals on the cars are not nearly as good. Right now almost any consumer can walk in off the street and buy a pickup for the same or even less than I was paying as a fleet manager for my employer just a few years ago.
I’m guilty of this myself. A few months ago I bought a GMC Sierra. Part of ther reason I bought it was that I ended up getting a 4×4 1/2 ton with the mid line equipment level for about the same money as I paid 11 years ago for a new 1999 Sierra with 4×2, rubber floormat and roll up windows. The 2010 gets better milaege, is way quiter, faster and will carry and tow more. If you need a truck, theres never been a better time.
It is a shame that the small pickup seems to be on the way out, but the fact is automakers build and concentrate on what people will buy. With the exception of the Ranger, most people won’t buy a small pickup if they can possibly afford a full size. They are harder to get rid of used as well, my last 3 ended up selling to teenage children of employees for a song.
Like it or not, the full sized pickup is now the standard vehicle in many parts of North America.
Yesteryears Impala is now a Silverado crewcab, chipped up Dodge diesels with lift kits have replaced Trans ams and jacked up Road Runners with 20 something men, and Airstream trailers pulled by wood sided staion wagons have given way to 5th wheels hauled by 400 horsepower trucks that can pull a mountain pass at 80 mph.
Thats what happens when a generation of wrong headed politicians try to social engineer us into the types of vehicles they think we should drive and then leave a loophole you could, well, drive a truck through.
Some people Need Trucks. The landscaping business I work for needs them. What else Is going to tow the 13,000lb Bobcat trailer plus the 10 yards of mulch in the back of the 350 Dump Truck.
@ FordDude: You Don’t need an F-150 to bring your dirt bikes to the desert. My friends have been doing it in their Tacomas and Rangers for years.
It’s true Cody that the tax exemption has been there since the 70’s.
However they “upped the ante” in 2003.
Under the Jobs and Growth Act of 2003, Congress raised the deduction ceiling for these heavy-class vehicles from $25,000 to $100,000, bumped the “bonus deduction” from 30 percent to 50 percent, and left in place the accelerated five-year depreciation schedule. This, in effect, made virtually all three-ton, business-use SUVs fully deductible in the first year. More than 50 vehicles qualified for the tax break.
Apparently although the law was revised in 2004 there is still a tax benefit to buying a 6000lb vehicle over a more economical car.
This is true, and it is asinine. This loophole has, in part, swayed me from buying smaller trucks in the past. I went from considering Tacomas and Frontiers to buying diesel F350s. In the end it was the tax benefit and the fact that the F350s got similar mileage to the smaller trucks that clinched the decision.
Either way, I wish yuppies would stop buying trucks. I’d love to see manfucturers go back to offering trucks with low bed heights, reasonably sized wheels and tires, and mechanically simple drivelines and suspensions. Alas, it’s probably too late for that.
@Cody Amen to that. I’m boggled by the fact that current “1/2 Ton” pickups dwarf my used to be huge 89 F350 Crewcab. My truck is already well into “too big to be practical” territory. Takes up 1 1/2 parking spaces on the street, pita to turn around, etc. If I didn’t need the load carrying capacity I’d exchange it for something shorter and lower. I really can’t fathom what people using F150s and F250s as daily grocery getter are thinking.
The demise of the pick-up in america seems unlikely under nearly any circumstances other than by choice. Do americans need pickup trucks? Only a very few people do and I’d say 10-20% of people is a very high estimate. Go to Europe and see how few pickups are on the road. Sure Europeans may have different lifestyles but they tow lots of things, with cars no less. But america has never been a place for people who like to limit themselves. You may need only water and 1000 calories/day to survive but that wont stop you from wanting the steak. Ditto with pickups. When it becomes unfashionable to own pickups only people who really need them will own them. Until then no changes expected
The dirty little truth about trucks, including pickups, is that they are absolutely necessary for many people in America. Most business have at least some of them, and it is impossible to pull trailers and haul much in a car. This is especially true of the little clown cars that the enviros want us to drive. I just love it when a supposed environmentalist gets busted for being a total hypocrite, like Jesse Jackson having his Cadillac Escalade stripped in Detroit while yapping about “green jobs”:
http://jalopnik.com/5629715/jesse-jacksons-gas+guzzling-escalade-ironically-stolen-after-green-jobs-rally
So what’s the difference between driving a vehicle that is bigger than we actually need and living in a home than we really need?
A bigger home costs more to build, takes up more resources, uses more energy for heating and cooling, etc. Takes more resources as the years go by for upkeep. Why have 2 bedrooms when 2 kids will fit in one? Maybe that foyer and dining room are wasted space when you can eat in the kitchen just as well?
If we all should be driving around in little cookie cutter cars because we don’t “need anything bigger” then maybe we should go all the way and move into tiny little houses? After all, do we “really need” a house as big as the one we’re currently living in?
Bingo! While this site is about “cars”, these environmental rants that come up from time to time ignore the fact that 70% of US energy consumption is not for transportation, but heating and air conditioning buildings. Burning coal produces 50% of the electric power and if you buy into the CO2-based “climate change” thing, that should be your big target, not trucks and SUV’s.
Just came back from a week in Quebec, mostly Quebec City. I saw just a few pickups, large or small and essentially no SUVs, large or small, other than those driven by tourists. Yet most of the business conditions including gas prices are very similar or the same as in Ontario. In Ontario, pickups and Suvs rule suburbia and beyond. I can’t figure out, well I can but can’t believe my conclusions namely that people are different (smarter) in Quebec and think differently (more smartly). If Quebec can live mostly on small cars, the rest o the NA can too. All we need is the will and the change in our priorities in being able to regard the car as a utility or an appliance. No need to spend extra on a sexier appliance when a basic one will do just as well.
The dirty truth about pickup trucks is that most of them are laughably larger than they need to be, and the owners are as self righteous and pretentious about their “lifestyle” as any environmental freak.
Sadly this even applies to many work pickup trucks, which are often lifted and tired in a way that actually makes them hard to load or use.
Buy what you like, no problem. The real problem lies in those not wanting to pay the freight for the choices they make. Everything has a direct economic cost and a indirect societal cost. The second one is often left unpaid. The price of a gallon of gas may cover the cost to the oil company, but what about the military costs of keeping the oil flowing? Or the environmental costs? the health costs? When one says they have the right to use as much fuel as they want, well you do when you pay all the freight…
I’ve always thought of the tree huggers as self righteous, and OFTEN have no idea what they are talking about when it comes to the automotive world.
What exactly is everyone’s definition of a Tree-Hugger?
I don’t really like full-size pickups, or pickups in general, because a Van is better for 90% of things anyway. BUT YOU MAY BUY THEM IF YOU WISH.