Here's some good news for Detroit: Contractors are acquiring pickup trucks in much greater numbers than they have in the past two decades, a hint that the long-depressed construction sector is recovering.
"Contractors are back," says a report issued this summer by CNW Research, which adds that the sales trend "indicates that there's more construction work to be had, and a new truck is needed."
In the first half of this year, contractors procured 51.2% of all new pickup trucks sold, according to CNW. Not since the 1980s have contractors taken up more than half the market. Contractor sales are typically in the 40% range, but, in 2008, they dipped to 39.4% and have been climbing steadily since then.
The rebounding construction sector is driving fleets to rebuild inventories, observers say. In August, the Dodge Momentum Index grew 1.4%, led by new commercial projects entering the planning phase. Dodge, like ENR, is a unit of McGraw Hill Construction.
"In the last 12 months, we've seen a surge in new work and construction employment," says Andy Agoos, a fleet management consultant in Windermere, Fla. "That means there are more crews out there, and the end result is, you have got to have a truck to go out with those people." Many fleets held back on replacing trucks during the downturn, he adds.
Meanwhile, a larger pool of updated models is available. This year and next, General Motors, Ford, Ram, Toyota and Nissan are all rolling out redesigned versions of their full-size pickups, giving buyers an incentive to try out new brands.
"Trucks are always competitive, but it's supercompetitive right now," says Michael Cooperman, spokesman for ALG Research. He estimates that, with each model refresh, residual values also rise roughly five to 10 percentage points.
For example, the new 2014 Chevrolet Silverado 1500 crew cab, which ENR recently tested, will be worth about 55% of its purchase price after 36 months, ALG predicts. That compares to 47% for the 2013 model year.