Let me preface this by saying...this is not to bait anyone in to an argument, isn't aimed at anyone or a particular truck, it's strictly a financial discussion based on the astronomical prices of trucks these days. I've been thinking about it since I posted this:

I've stated that I think ALL truck prices are super inflated. I dunno where the ceiling is, but I believe the truck boom will crash sooner or later. Whether that's due to gas prices, or it's no longer sexy to own a truck, whatever the case may be. No different than the stock market, it reached it's peak (who knows where that is for truck prices), and it was an unsustainable level (there will come a time where truck prices are so high 'no one' can afford new ones), it crashed (we've seen mini dips predicated on fuel prices), it's finding it's way to an equilibrium (will that be a 40k top end truck, a 50k? 60?, I dunno)...and then it will climb again...I see no difference. As I mentioned before, truck prices are growing exponentially faster than the median US wage.

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and this...

Given this is wiki an darn near 6 years old...but the data is similar to what I've pulled before...the chart half way down the link depicts what I'm saying here:

http://en.wikipedia.org/wiki/Personal_income_in_the_United_States

IIRC...Brad sais his brand new top of the line truck in 1968 was $2800ish. Median income was right around $6500. Adjusted for 2004 numbers by the wiki chart, that would be a $28,100 median income and roughly a $12,000 truck.

My father bought his brand new top of the line 96 for $27k and median income was roughly $28,000. Adjusted for 2004 numbers by the wiki chart, that would roughly be a $31,000 median income and and roughly a $29,500 truck.


Now fast forward 15 years, I doubt median income is much more than low 40's...and top of the line trucks are 60-70k. C'mon, that's just ridiculous. And the whole truck pricing scale has slid, it may not be as dramatic on the lower end, but it's still absurd. I just don't see how prices can or will forever climb. When, not if, but when (because the only thing that can infinitely grow is the US government), the truck market does crash, I'll be interested in seeing where the pieces fall.

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I'm really looking as to why truck prices have grown so exponentially in the recent years. Things I can come up with:


-Devaluation of the dollar
-Market scope has shifted, and they actually are aiming trucks at higher end buyers
-Simple supply and demand


Not sold on and questioning:
-More engineering is involved, however, it's not even close to being a proportionate evolution, keeping in mind there was new technology being implemented at all times. So is there really a bang for the buck?


Unasnwered questions:
-With more and more work being done overseas, shouldn't prices essentially be going down? Or is the profit margin widening?

-When 'technology' is introduced in most other segments, when it's no longer 'hot' prices sink like a rock...but not in the automotive world?



I'm sure there are more questions I've had, but I can't remember them all at the moment.


Disclaimer...I also understand truck enthusiasts have been around a looooong time. I also feel a truck driver represented something different 30 years ago today, my opinion that won't change, hence why I say trucks are the 'in' thing. However, what is different today is truck prices don't reflect wages...not that they should, but I don't see how the truck market is sustainable if the two don't reflect each other. As pointed out, you get a bottom of the barrel relatively stripped (not IMO) 150 today for what you could get a top of the line 350 for 14 years ago...something doesn't seem right about that to me.

Have you compared the inflation of the price of a truck compared to cars?



I need a excel graph by tomorrow.

I really think in recent years trucks became the "new" SUV. By recent I mean probably the last 10-15 or so. As economic times got good people bought more vehicles, more toy haulers more toys and had a more perceived need for a truck. As times got tough some folks had to make a decision as to which vehicle to keep and the truck was the natural choice since it could do everything a car could do plus the extra's.

All that being said I think that truck prices climbed and climbed because the consumer could pay and would pay the higher prices. Makers started discontinuing the entry level trucks because that is not what anyone wanted. I drove a 2006 F350 CC Diesel for a while and it was LOADED and drove as close to a car a a big truck like that can come. Consumers killed the entry level truck market because they weren't buying it. The wives and kids wanted the nicer ride the high end trucks offered as well as the capability they offered.

I guess what I am saying is that truck prices have always been this high (proportionally) but that it is more noticeable now because of the lack of different models available nowadays meaning a lower spread between what is now the "base model" compared to what is now the "top of the line"

Ben, this is a read that I will show to my dad; I'm going to see him in about an hour. I'll let you know what he has to say from a salesman's point of view.

Aaron, great explanation. And was along the lines of what I was trying to relay. That said...how in the hell can the current prices be supported by the economy we're living in? Will we see a return of the entry level truck?


Alright...thanks Austin, I look forward to his reply.

CaFordDude said:

I guess what I am saying is that truck prices have always been this high (proportionally) but that it is more noticeable now because of the lack of different models available nowadays meaning a lower spread between what is now the "base model" compared to what is now the "top of the line"

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I added this in after your post Ben...

I think some of the current pricing will be supported out of necessity...Look at the yellow Amarillo Brad has posted up before...A company truck for his son/nephew (forgive me I don't recall the relationship) business...So I think businesses that need trucks will be stuck buying higher and higher end trucks because of the lack of availability of the lower end trucks. That will prop up pricing and keep it higher. Consumers who have been used to living with the high end versions of their truck will continue to buy them because that is what they are accustomed to and want.

CaFordDude said:

I added this in after your post Ben...

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I see that part now. And I was agreeing with you until that point. With the numbers I pulled...it shows anything but being proportional. The range on adjusted median income from 1968 to 2010 is roughly 15k. The range on adjusted truck prices from 68-2010, is roughly 50k. Meaning truck prices increased 3 times faster than income rates.

CaFordDude said:

I think some of the current pricing will be supported out of necessity...Look at the yellow Amarillo Brad has posted up before...A company truck for his son/nephew (forgive me I don't recall the relationship) business...So I think businesses that need trucks will be stuck buying higher and higher end trucks because of the lack of availability of the lower end trucks. That will prop up pricing and keep it higher. Consumers who have been used to living with the high end versions of their truck will continue to buy them because that is what they are accustomed to and want.

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That's another point I was considering. I think Ernie posted before that 40% of Lightduty Ford sales go to commercial use. How is the construction site going to be able to afford that new 60k truck, when they were used to a 30k truck...they won't, and they're rebuild what they have or buy used. Add municiplaities...my town of Granite Quarry has X number of new trucks budgeted in every Y years. Guess what, if that price goes up, that means something else isn't getting the cash...or that means they buy the amount of trucks they can afford...or they buy used.

I think some of those professions will buy trucks because they NEED trucks. Rebuild, sure but how many times and for how long? I do agree that they may only buy 1 a year as opposed to 2 a year but I do think they will continue to buy.

For the sake of an easy argument lets talk specifically about Ford and EXCLUDE every other manufacturer. What if they do discontinue the Ranger as they have talked about. Where do those truck buyers go. Some may decide they don't really need a truck, some may decide to buy and rebuild/restore re-use an older model truck but there is at least a portion of those folks that will want/need/desire a new truck. SO they were used to a top of the line ranger say $25,000 for one (guessing at a price) Would they then settle for a lower end F150 without the amenities just for the sake of price? My guess is no. They are going to want a similarly equipped F150 which means they are going to spend more money thus helping to sustain the higher prices.

It is my opinion that the only true way to lower prices is to have an all out consumer revolt against the higher prices/higher end trucks. The caveat is that much like the gas protests it does not work if someone stocks up before the actual revolt or continues to use the product during the revolt because all you do is shift WHEN the product is demanded not IF it is demanded.

UTfball68 said:

or they buy used

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This.

My wife and I have been thinking about buying a SuperDuty and a travel/camping trailer, but, the $$$ is off the charts, right now.

Oh, we could make the payments, but, why should we???
I'm looking at retiring in the next couple of years, and I'll be darned if I want to get strapped down with a BIG truck payment.

So. . . . I found a 2004 SuperDuty w/extended cab, with a 'contractor's box' on the back for $7,400 (and change).
Granted, it had 64,000 miles on it, and I would need to buy a pick-up bed for it, but, it was AFFORDABLE for what Deb and I were going to use it for - pulling a trailer!
(Oh, and it was 4-wheel drive, too!)

UNFORTUNATELY, when I had decided to go get the $$$ out of the bank and pay for it, the danged truck was G O N E.

So, I'm still looking around for a truck, but, I'm not buying a new one. I have no desire to toss $40,000+ out the door for a new one. (And I have no desire to keep working, until I'm 70, either!)

CaFordDude said:

It is my opinion that the only true way to lower prices is to have an all out consumer revolt against the higher prices/higher end trucks. The caveat is that much like the gas protests it does not work if someone stocks up before the actual revolt or continues to use the product during the revolt because all you do is shift WHEN the product is demanded not IF it is demanded.

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I couldn't agree more with that statement. Only other option I see, is a collapse in the truck market similar to the housing collapse. I believe initially it will be lead by consumer financial irresponsibility, ie rolling reamining balances into new loans on new trucks...and eventually it'll catch up with them, if they decide to do this 10-20 years, and at the end, they have 50k in debt with a 10k vehicle. And right now, the lending purse strings are tight, the economy goes in cycles, so in another 10-15 years, the wreckless and irresponsible lending practices (in a different form of course) will once again be implemented for the almighty sale, and get people in to vehicles they can't or shouldn't afford. And the final scenario will be predicated on fuel prices, of course there will always be the diehards and the folks that truly need a truck, but we caught a glimpse of what could happen to the truck market when fuel went over $4/gallon. Albeit my opinion, but somewhere at some time, there has to be a collapse in the truck market.

Ben, if the numbers you pose are accurate, then you're correct, it's unsustainable and something will have to change.......just look at the housing market and what happened to it, although you can't truly compare those apples....however, the auto makers can sustain a loss on a certain vehicle (to maintain market share) a lot longer than a company with one product, meaning the other makes of cars' profits can offset their truck losses until things get better (or so they say)....if not, then bankruptcy....just ask GM and Chrysler.

^^^I think that last line actually says more than anything else in this thread. Totally forgot about that. I realize the truck vs. housing argument aren't apples to apples...but I think a parallel comparison. As for the numbers...they are relatively accurate, not exact...but usable.

UTfball68 said:

^^^I think that last line actually says more than anything else in this thread. Totally forgot about that. I realize the truck vs. housing argument aren't apples to apples...but I think a parallel comparison. As for the numbers...they are relatively accurate, not exact...but usable.

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Definitely of the same fruit comparison.....

UTfball68 said:

I couldn't agree more with that statement. Only other option I see, is a collapse in the truck market similar to the housing collapse. I believe initially it will be lead by consumer financial irresponsibility, ie rolling reamining balances into new loans on new trucks...and eventually it'll catch up with them, if they decide to do this 10-20 years, and at the end, they have 50k in debt with a 10k vehicle. And right now, the lending purse strings are tight, the economy goes in cycles, so in another 10-15 years, the wreckless and irresponsible lending practices (in a different form of course) will once again be implemented for the almighty sale, and get people in to vehicles they can't or shouldn't afford. And the final scenario will be predicated on fuel prices, of course there will always be the diehards and the folks that truly need a truck, but we caught a glimpse of what could happen to the truck market when fuel went over $4/gallon. Albeit my opinion, but somewhere at some time, there has to be a collapse in the truck market.

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Hmmm. Lets take this one step at a time.

1. Commercial users. The actual price of the truck isn't what's going to drive the purchase decision. Remember, Ben, there are tax incentives at work as well in this sandbox. What killed the commercial market in '07-'08 wasn't pricing- it was the availability of money itself. You'll find the same to be true for government buyers.

2. re: Base trucks. Don't be fooled- there's still a huge market for base trim level trucks. You just never see them on lots because most are sold via factory order, not pulled out of dealer stock.

3. Private market buyers. A few years ago, GM did a marketing survey on new vehicle demographics, and came to the conclusion that the reason entry-level veicles don't work that well is very simple. There's a large group of buyers out there that can't afford a new anything- and they'll be buying used. That group is increasing in size. On the other hand, there's another (affluent) group of buyers that seems to get more affluent each year. Their numbers are also increasing.

Sooo... what's wrong with this picture? Answer- the great middle is shrinking. The "average" buyer that trades every three or four years, swaps one payment for another, and likes driving a late model car/truck. They're getting squeezed every way to Sunday, and they've been exiting the new car market ever since RE (and cheap home equity loans) blew up.

So where does this take us in the truck market? My own take:

The basic truck market lives on, fueled by the commercial market. The $50,000- sky's the limit market lives on because of an increasing number of buyers who will because they can.

Meanwhile- in case no one's noticed- the used truck market has gotten stronger by the day. Pickups are again carrying incredibly high resale values- including the older stuff.

polarbear said:

...There's a large group of buyers out there that can't afford a new anything- and they'll be buying used. That group is increasing in size. On the other hand, there's another (affluent) group of buyers that seems to get more affluent each year. Their numbers are also increasing.

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There's also a (small but not insignificant) fraction of guys like me...I can afford to buy brand new, and want a fairly low-trim truck.

Thing is, now that I've bought one, I'm gonna run it into the ground. Ford ain't gonna make enough to make it worth their while selling me a Ranger with a 5-speed, floor-shift transfer case, and crank windows once a decade...

It's simply not exponential when you factor in inflation. It's just not.

Ryan

What I've understood with astronomical prices is: they do it because they can.

If you're not going to buy a new truck because of prices, you'll buy used. There will still be a number of people who are looking for the latest and greatest in trucks, so they will buy new. It's kinda like the "I'm gonna buy a Shelby, but I'll only drive it twice" syndrome. People will always buy, so prices can go anywhere.

I will say that engineering has been progressive lately. I'd pay extra money for an Ecoboost - I'd expect the price to be more at the time. I'd also expect that it would stabilize in a few years. As Ben said, that often doesn't happen.

When compared to others, the automotive market doesn't move as fast as, say, electronics. A new computer is out-dated 3 months after its release. I can't say the same about a truck.



I, personally, cannot see myself buying new anytime in my future; it simply isn't worth my financial while. Ford and the other two are making money, turning good profits for our fiscal position, and pumping volumes of cars off of the lots all while employing Americans. I can live with high prices.

O'Rattlecan said:

It's simply not exponential when you factor in inflation. It's just not.

Ryan

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I adjusted for that. Given that was with 2005 numbers.

austin26372 said:

What I've understood with astronomical prices is: they do it because they can.

If you're not going to buy a new truck because of prices, you'll buy used. There will still be a number of people who are looking for the latest and greatest in trucks, so they will buy new. It's kinda like the "I'm gonna buy a Shelby, but I'll only drive it twice" syndrome. People will always buy, so prices can go anywhere.

I will say that engineering has been progressive lately. I'd pay extra money for an Ecoboost - I'd expect the price to be more at the time. I'd also expect that it would stabilize in a few years. As Ben said, that often doesn't happen.

When compared to others, the automotive market doesn't move as fast as, say, electronics. A new computer is out-dated 3 months after its release. I can't say the same about a truck.



I, personally, cannot see myself buying new anytime in my future; it simply isn't worth my financial while. Ford and the other two are making money, turning good profits for our fiscal position, and pumping volumes of cars off of the lots all while employing Americans. I can live with high prices.

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Is this your opinion or was this what came from your dad?