Auto Service World
News   October 18, 2006   by Auto Service World

PIN Study Shows Renewed Life in Truck Market

The recent decline in gas prices has brought an increase in owner loyalty rates for pickup trucks and SUVS, which had been adversely impacted by higher fuel prices earlier in the year, according to real-time retail transaction data from the Power Information Network (PIN), a division of J.D. Power and Associates.
To better reflect consumer demand for new vehicles, PIN data includes retail transactions only and does not include fleet sales.
Owner retention rates for the large pickup, large utility and midsize utility segments have all risen in the seven-week period from mid-August to early October — the time period during which gas prices steadily dropped and averaged $2.66 per gallon — when compared to the prior seven weeks, when gas prices averaged $3.04 per gallon.
Owner retention is measured by the percent of owners in any given category who trade for another vehicle in the same category.
PIN data shows that at the model level, four of six high-volume large pickup models, four of five large utilities and seven midsize utilities all have experienced increases in owner retention during the same time period (mid-August to early October).
“It’s early, but this data suggests there still is life in these segments,” said Tom Libby, senior director of industry analysis at PIN.
“These segments are important because they include many high-volume, high-profit models. These findings are also relevant because Ford, General Motors and Toyota all have new products coming in these segments.”
The large pickup, large utility and midsize utility segments account for almost one-quarter of new-vehicle sales — a combined 23.5 percent year to date through September.
They also include some of the most profitable models in the industry, such as the Chevrolet Suburban, Ford Expedition, Jeep Grand Cherokee and Toyota 4Runner.
“The effect of rising gasoline prices on sales mix and retention rates has been evident for some time now,” said Bob Schnorbus, chief economist at J.D. Power and Associates.
“It will be interesting to see if falling gasoline prices will have a completely opposite effect on the market, especially if prices remain above $2 per gallon. Most likely, consumers have fundamentally changed their perception of the importance of fuel prices in their purchasing decisions and will continue to shy away from larger vehicles.”
PIN’s automotive solutions are based on the collection and analysis of daily new- and used-vehicle retail transaction information from more than 10,000 automotive dealership franchises in North America.

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