It is no secret that truck and full size SUV sales are slow. In fact nationwide they are off almost 30%. This is due primarily to high fuel prices and a slowing economy. Many businesses, especially those that depend on the housing industry are feeling the pinch of slow business. But businesses that need trucks to do their work will eventually need new ones.
So why should a business add to their fleet now? I say add to your fleet rather than replacing trucks because the pendulum on truck trades has swung a bit too far to the left. Used truck prices are depressed because of the psyche of the consumer who is looking for cars that get great fuel economy, not trucks designed to do the work of American business. I am certain that there will be some recovery in truck values. It always happens after any market overcorrection. Business owners can keep their old truck as a convenience or wait until the values recover and sell them outright in the public market or to their dealer. If you want to trade, GM is offering rebates that go a long way to offset depressed trade values.
Perhaps the most compelling reason to buy now is the incentives the factory is putting on trucks. GM announced the closing of four truck plants last month. But make no mistake; GM still relies heavily on truck production to support corporate profitability. To keep the dealers ordering trucks and the plants rolling, GM is offering some of the most incredible savings I have ever seen. Right now you can get up to $6,000 in incentives or 0% financing for up to 60 months. There are other offers that combine financing and rebates. If you have a larger fleet of vehicles there are cap leasing plans and fleet incentives that are the best in decades.
Another compelling reason to purchase a new truck or SUV is fuel economy. Over the past 5 years there have been significant engineering advances in engine and transmission technology that yield better fuel efficiency than ever before. Use of composite materials makes new trucks lighter, increasing payload and miles per gallon. GM’s trucks offer the best V8 mileage of any full size truck on the market. And with GM’s “Best Warranty in America” including 100,000 mile power-train coverage, your ownership costs will be less than ever.
The automobile market is not unlike the stock market. When no one is buying the prices are lower. When everyone is buying the prices go up. By comparison, the factory is offering incentives to get you to buy now. Once the market recovers, there will not be the need for incentives that are as aggressive as the ones we see today.
Business cycles are somewhat predictable. History tells us that recessions typically last about 8 months. In August it will have been 6 months since the Federal Reserve Bank slashed rates almost three percent. Economists are generally unanimous in the belief that rate cuts work their way into the economy with the greatest benefit starting 6 months after the cuts. The government has offered one economic stimulus package and more are sure to follow. Many economists believe that although the price of oil will probably never return to 2006 levels, there is a bubble of speculation that sooner or later will burst as any speculative investment trend does. When the housing bubble got to big, it deflated. When tech stocks got out of control the market adjusted. So too will the oil bubble. It is not a question of if but when.
If you believe the economy will recover in the next 12 months, and you require trucks for your work, I suggest that this may be the best time in decades to ad to your fleet. If you are a business person that is trying to re-engineer your systems to accommodate more fuel efficient vehicles, perhaps even cars, we have a solution there as well. But that is the topic of another Did You Know article.
For information on this and any other GM programs visit us online at www.gmgiant.com.
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