Truck enthusiasts Ernest Johnson and Mike Herron couldn’t be more different.
Johnson, 80, lives in Pontiac, Mich. He retired from General Motors in 1999 where he drove a tractor-trailer delivery truck for 35 years.
Meanwhile, Herron, 65, lives in Durant, Okla., 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 an amount equal to that of a small house to buy new 2019 GM pickups.
“The price is a little high, but with all the technology on it, I guess it’s worth it,” said Johnson. “But, in the future, it’s something a lot of people won’t be able to afford.”
Johnson paid 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 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 the same period. For that price, a person could buy a Mercedes-Benz 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.
Last month, the average transaction price for the Ford F-series was $46,591. The Chevrolet Silverado was $42,162 and the Ram came in at $42,484, according to J.D. Power’s Power Information Network data. Those figures include 2018 and 2019 model-year pickups.
Chevrolet only started trickling out the high-end, more expensive, redesigned 2019 Silverado in August. GMC also started delivering the redesigned 2019 Sierra Denali, its luxury pickup, to dealers around the same time. Cox Automotive said the average transaction price in 2018 for the Sierra 1500 is $51,794 and $58,738 for Denali trims.
Like GMC, Chevrolet started shipping the loaded Silverado pickups first in a “staggered launch,” said Monte Doran, a Chevrolet spokesman.
“The first production trucks are our most popular: crew cab, V8 models — LT trim and above,” said Doran in an email. “By the end of the year, we will expand production to include the other cabs, models and engines.”
The average transaction price for F-series pickups is higher than the other two brands because about a third of F-series buyers purchase high-line Lariat, King Ranch, Platinum, Limited and Raptor model pickups.
Also, Ford does “a lot of volume on XLT and work trucks, which gives us year-to-date (September) sales numbers that are now 254,000 trucks higher than Silverado and 303,000 trucks higher than Ram,” Ford U.S. sales analyst Erich Merkle said.
But Ford also offered the lowest incentives last month at $4,863 on average compared with $5,266 on the Silverado and $5,588 on the Ram, J.D. Power data said.
Looking for luxury
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. People are saying, ‘I want those even if those vehicles are used to haul mulch.’ “
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 United States at about $59,000.
“So those who purchase a truck have even more money than those who buy a new car,” said Strategic Vision’s Edwards. And, that’s even as the median purchase price of a new vehicle is $34,000, well below that of a pickup, he said. “Yet, the new vehicle buyers are more likely to be college-educated than those buying new pickups.”
Only 15 percent of full-size pickup buyers use the trucks for business, Edwards said. Of those who buy heavy-duty pickups, only about a quarter of them use them for work, he said. Yet, when asked whether pickup owners use their pickups to carry their kids daily, 12 percent said yes, compared with just 7 percent in 2009, he said.
“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.”
The top price
Mike Herron could have been one of those, but he decided to keep his garage to one vehicle: a pickup. He sold his 2017 BMW X6 sports coupe in late August to buy a 2019 GMC Sierra Denali pickup for $70,000.
“I wanted it because it’s got a sweet-looking body and has every feature imaginable. It’s luxurious on the inside and drives like a German luxury car,” said Herron. “The technology on this truck does more than the BMW technology does.”
Herron said he believes he got a good price because the Denali trim level will hold its resale value better than his BMW did. Herron paid $84,000 for his BMW when he bought it new 23 months ago. He sold it for $44,000.
Herron, whose son has dubbed the pickups the “new urban limousine,” admits he would pay up to $100,000 for a pickup “if I thought it was worth it.”
Kurt Wagner, 48, of White Lake paid $60,000 in early August to buy a 2019 GMC Sierra Denali pickup, he said. Wagner traded in his 2013 Chevrolet Silverado, which he paid $40,000 for new five years ago.
“I run the payments through my company because I use it for work, too,” said Wagner who co-owns commercial heating and cooling company Mechanical 1 in Troy.
Wagner wanted the updated luxury and ride that the new trucks offer. He also liked the technology such as more cameras around the truck for better safety, Bose speakers and an electric tailgate. But he admits, when pickup prices push $70,000, he will draw the line.
“Then, I’m going for a Bentley or something. Trucks are expensive because they do a lot and I understand that concept,” said Wagner. “But $70,000 is when I have to start answering to people. I have a business partner, and my wife would have said, ‘Wait a minute, buddy.’”
Wagner is generous compared with most average pickup buyers. In September, website shopping site CarGurus surveyed 203 current pickup owners from the CarGurus user panel. It found that, on average, pickup owners said $35,000 would be a good deal on a new pickup, but $45,300 would be too much to pay.
The current average list price of a new pickup on CarGurus is right at the “too high” threshold — about $45,200, said Madison Gross, CarGurus’ senior manager of customer insights. Pickup owners with a household income more than$100,000 said $40,600 would be a good deal and $51,800 would be too much to pay, said Gross.
Is all that technology worth it?
Car dealer Charlie Gilchrist, owner of Gilchrist Automotive in the Dallas-Fort 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. … I’m not sure everybody wants all that technology, but we’re adding all of it. We’re actually in the luxury business at those prices.”
Gilchrist may be on to something. The CarGurus’ survey found that 78 percent of respondents said they would forego an automatic open-close tailgate and 63 percent said they’d give up a Wi-Fi hotspot to get a lower price. More than half said they would give up head-up display or lane-keeping assist.
“This survey showed that pickup truck owners believe some of the new technology is nice to have, but not essential and not worth the price,” said CarGurus’ Gross. “We’re at an interesting time in the pickup truck category where many people are using their pickup trucks for more than just work. Those looking for a truck purely for work purposes don’t need all of the new luxury features, and those looking for a truck for commuting or leisure don’t need all of the new work features.”
Still, Herron was one of Gilchrist’s GMC customers. Gilchrist said he has had others trade in Mercedes-Benz vehicles to buy a pickup. Then there are those really rich orders such as the Ford Platinum F-450 Super Duty truck Gilchrist sold for $100,000.
“It’s a statement,” said Stephen Gilchrist, dealer operator at Gilchrist Automotive. “They’re a professional rodeo person, so it’s part of who they are.”
But how do dealers get the average consumer financed to keep selling the highly profitable pickups?
One way is relying on incentives automakers offer on the outgoing models that provide for heavy discounts. For the month of September, the average incentive across the Ford F-Series, the Chevrolet Silverado and the Ram was about $5,000, according to J.D. Power PIN Data. But those incentives are not typically offered on the redesigned 2019 Silverado, GMC Sierra or Ram, dealers say.
For now, the banks continue to loan money at reasonably low interest rates, helping dealers sell pickups, dealers say. At Gilchrist, the dealership averages a 60-month loan on pickups and strives to hold it to a short-term, said Stephen Gilchrist.
In metro Detroit, most customers lease pickups, making it easier to get them into the high-priced vehicles, said Paul Zimmerman, director of sales at Matick Automotive in Redford. Matick sells Chevrolet and Toyota brands.
Edmunds’ Drury said about 18.3 percent of full-size truck buyers opt to lease, which is inching closer to the lease rate for midsize cars at 27.3 percent, but still well below that for entry luxury cars at 66.9 percent.
“Leases are great on the 2018 model and will be on the ’19s, they’ll be competitive, but they’re still challenging,” said Zimmerman. “These trucks are competitive with luxury imports, so you have to have those customers who are high net worth and have good credit” to make the sales.
No end in sight to high prices
So what will ultimately bring down the price of pickups?
Simple supply and demand. Consumer 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. The average price of regular gas was $2.88 on Oct. 1, according to AAA. That’s a far cry from its peak of $4.11 in July 2008, AAA shows.
“If you look at 2005, 2006, 2007 as the gas prices were spiking, people stopped buying SUVs and pickups except for work purposes,” said Maryann Keller, principal of auto industry analyst firm of Maryann Keller & Associates in New York.
That shift to cars radically impacted the Detroit Three’s earnings, helping tip GM and Chrysler Corp. into federal bankruptcy protection. Keller 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 automakers could command for pickups, she said.
Or a downturn in the economy could lead to lower pickup prices, Strategic Vision’s Edwards said.
But for now, he said, “those who love their trucks are willing to spend on a truck and the image of that truck reflects the image of what they want to be. I don’t think we’ll see prices lowering on that in the near future, especially since there are so many capabilities and features that the person needs and the image that they want.”