Death, taxes and rising gasoline prices are among the sure things of life in California.
And apparently one other thing: When gas prices do take a tumble, Golden State consumers are willing to buy light trucks ranging in size from practical to monumental.
Statewide purchases of light trucks last year totaled 851,126, a whopping 19.4 percent spike from 712,607 in 2014, according to the Sacramento-based California New Car Dealers Association. By comparison, sales of new passenger cars rose only 5.8 percent. California’s year-over-year increase in light-truck sales also eclipsed the 12.3 percent gain seen nationally.
“Consumers have a very short-term memory when it comes to gas prices,” said Jesse Toprak, a nationally known auto industry analyst and head of Toprak Consulting Group in Encino. “You can look at a graph of gas prices and truck sales. The lower the prices, the higher the truck sales.
“Gas is $2 a gallon, so it’s time to buy a truck.”
While even Toprak conceded that his analysis was an oversimplification, it rang true among some motor vehicle shoppers who recently talked with The Sacramento Bee.
“Gas is cheap, so why not buy now?” said 55-year-old Roseville resident Robert Gregg, shopping sport-utility vehicle brands at the Roseville Automall. “My (SUV) is about 10 years old now. It’s time to replace it …Yeah, the (low) gas prices we’re having now pushed me out the door a little bit.”
The light truck sector includes SUVs, pickup trucks and vans/minivans.
I think you have fantastic new trucks that are being built by all manufacturers that are in that particular market…It doesn’t hurt that gas prices have gone down tremendously as well.
Brian Castonguay, general manager of Kuni Chevrolet Cadillac in Sacramento
Ford’s F-Series of full-size pickups led all statewide light-truck sales last year with 44,369 new-vehicle registrations, but smaller light trucks also did well. Honda sold 37,050 units of its compact SUV, the CR-V. The Ford Explorer led the midsize SUV segment with 22,640 sales. And while minivans are considered a niche segment, Toyota sold 23,038 Siennas last year to lead all new van registrations.
Sacramento resident Dawn Roberts, a 38-year-old mother of three, was shopping for a minivan at the Elk Grove Automall, and gas prices were high on her priority list.
“I definitely care about the price of gas and gas mileage,” she said. “I wouldn’t be out here if it was $4 a gallon.”
So, were relatively low gas prices the driving force behind last year’s robust light-truck sales throughout the Golden State?
“That obviously was a big factor,” said Brian Maas, CNCDA president. “It’s the one commodity that everybody knows the price … That subconsciously or consciously influences (buyers). But that’s not the only reason.”
Maas explained that California consumers cut back on vehicle purchases during the recession and have been driving their cars for a decade or more. The most recent CNCDA statistics showed that nearly half of used vehicles in the state last year were 10 years old or older.
That, Maas said, created pent-up demand for new light trucks, and motorists who have been out of the buying market for a decade or more are discovering significant advances in the vehicles, including improved fuel mileage.
“Increased technology, better mileage … There’s great stuff in these new vehicles, on the safety side as well as the convenience side,” Maas said.
Maas believes light trucks have improved so much over the past decade that a buyer who might have considered a station wagon or large passenger car years ago is more likely to opt for a comparatively smaller SUV or even a sizable SUV today.
Brian Castonguay, general manager of Kuni Chevrolet Cadillac at Fulton and El Camino avenues in Sacramento, agrees. He said his Chevrolet light-truck sales increased more than 100 percent in 2015 compared with 2014, and sales of the Chevrolet Silverado pickup were up 130 percent in that period.
“I think you have fantastic new trucks that are being built by all manufacturers that are in that particular market … not only safety features, but convenience features, luxury amenities, and keep it at a price point that’s appealing … It doesn’t hurt that gas prices have gone down tremendously as well,” Castonguay said.
Analyst Toprak added: “I think there are a lot of existing owners of light trucks that held their trucks for year … And with today’s (light trucks), gas mileage across the board has improved immensely. Small crossovers have been the fastest-growing segment in the industry for six years.
“Even if there’s an increase in gas prices over (this) year, there probably will not a big decline in demand in trucks and SUVs.”
Ford Motor Co. is among those betting big on continued momentum in the light-truck market. Earlier this month, the Michigan-based automaker announced that it is going to add four new SUV nameplates over the next four years.
Ford’s reasoning was based on buying patterns and needs spanning multiple generations.
“As members of the 80-million-strong millennial age group enter their prime child-rearing years, a leading indicator of more SUV sales, nearly 80 million aging baby boomers continue to prefer their SUVs,” said Mark LaNeve, Ford’s vice president of marketing, sales and service. “It’s a demographic double-whammy and it all points to one thing – more SUVs for the foreseeable future.”
LaNeve also noted: “Some SUVs now rival the fuel efficiency of V-6-powered midsize sedans from only a few years ago,”
Detroit-based auto analyst Len Brewster said he finds “nothing at all unusual” about swelling light-truck sales amid low gas prices, even with a long, well-documented history of ever-increasing at-the-pump costs over time.
“Consumers are consumers,” he said. “Consumers buy eggs and meat and milk when prices are low, and maybe they stay away from some of those things when prices rise. Nobody thinks that’s unusual. Buying a vehicle is a bigger investment, sure, but I think it’s only natural that consumers are drawn to dealer lots when gas is cheap.”
Robust light-truck sales would appear to fly in the face of goals set by Gov. Jerry Brown and other state leaders touting environmentally friendly, alternative-fuel vehicles. However, state officials insist that California continues to invest in infrastructure for those vehicles – including charging stations for electric cars and hydrogen-fueling sites – and point to the Golden State’s continued status as the nation’s top market for plug-in electric vehicles.
“One year’s data will not deter California from reaching its goal of 1.5 million zero-emission vehicles by 2025,” said Linda Rapattoni, a spokeswoman for the California Energy Commission. “The state is still on track for meeting that goal. To date, there are 184,657 plug-in electric vehicles in California, according to the California Plug-in Electric Vehicle Collaborative, representing 45 percent of PEVs in the U.S. Between 2014 and 2015, annual sales of plug-in electric vehicles in California increased by 32 percent.”
2015 California light-truck sales leaders:
- Compact pickup: Toyota Tacoma (31,082 new units)
- Full-size pickup: Ford F-Series (44,369)
- Van: Toyota Sienna minivan (23,038)
- Compact SUV: Honda CR-V (37,050)
- Midsize SUV: Jeep Grand Cherokee (15,771)
- Midsize SUV with three rows of seating: Ford Explorer (22,640)
- Full-size SUV: Chevrolet Tahoe (6,548)
- Luxury SUV: Lexus RX (17,798)
Source: California New Car Dealers Association