Skip to main content

High Demand, Low Inventory For Ford F-150

Despite economic downturn due to the pandemic, the demand for pickup trucks like Ford F-150 has not decreased. What has decreased is the inventory of trucks at dealer’s lots across the country. This could mean a shortage of specific trims, colors and higher prices.

We are in strange economic times indeed. That’s no secret. The country has been economically ravaged by the fallout of the Corona virus pandemic.

Ford Motor Company has fallen on bad economic times so far in 2020. This isn’t historic nor unprecedented as Ford has weathered other economic storms in its long history. But certainly, 2020 is not off to a great start for Ford, as evidenced by the statistic that they’re currently losing more than $150 million per day at the moment.

Ford appears to be ready to restart its manufacturing plants, including its four truck plants by May 18. If this happens it will be a much-needed and welcome news for investors, but also for car dealers who are finding a shortage of inventory to be a looming issue.

As I reported, much of Ford’s wealth and fortune depends on the F-150. The F-150 accounts for $50 billion in global sales. Clearly, these numbers don’t lie.

Kentucky Truck PlantLow Truck Inventory
Investment analysis company Morningstar recently showcased some eye opening information regarding inventory of the best-selling segment in the automotive industry.

As all automotive manufacturers have shuddered their plants (Ford, GM, FCA), naturally inventory has begun to drop for their respective car dealerships. Compile this with the aggressive financing plans that have been offered, which I’ve written about.

Zero-percent, 84-month loans for Ford F-150s have been offered to incentivize consumers to buy a truck and lure them out of isolation. It’s working as reported by Edmunds business. In April zero-interest loans for new vehicles was up 25 percent, year over year.

So in that regard Ford accomplished what they wanted to by offering such aggressive financing but as the truck plants remain closed, trucks are disappearing off lots.

Morningstar reported that all three U.S. truck manufacturers had lower-than-normal inventory levels. The number is calculated by average number of days-worth of inventory. A healthy number is more than 120 days-worth of truck inventory.

According to the Morningstar report, in April Ford had 111 days of inventory while GM had only 84 and Ram had 114. While this isn’t critically low, these could drop even more for the month of May as none of the Big Three have restarted their factories yet and even if they do, they likely won’t be back up to full production any time soon.

What This Means For The Truck Consumer
While you can get great financing right now, you also may not be able to find the top-of-the-line trim or that special color you want. When the industry is healthy and car dealers inventory is optimal, you can walk onto any lot and find the color, trim, make, model you want. That isn’t happening right now.

To find the most attractive trims, you may have to wait or check multiple dealerships. And likely you will have to pay more. The only other choice is to compromise and not get everything you want.

If Ford doesn’t restart their truck production on May 18, the inventory will drop for sure.

2020 Ford F-150 Lariat interiorDemand For Pickups Hasn’t Dropped
This week I saw an interesting story from Bloomberg that surprised me. The headline alone caught my attention: Pickup Trucks Outsell Sedans in U.S. for First Time Ever.

That didn’t seem like news to me as pickup trucks have been at the top of the best-selling vehicles list for many years and the Ford F-150 has been the best-selling vehicle for more than a decade, and the best-selling pickup truck for more than 40 years. So at first glance that Bloomberg headline seemed like a no brainer.

Bloomberg reported from data compiled by Autodata Corp. that in the month of April pickup truck sales (amongst all auto manufacturers) outsold cars/sedans by 17,000 units. This had never happened before in the automotive industry.

What this shows, is what many of us already knew, cars are becoming obsolete and trucks, along with SUVs remain in high demand. This is why Ford is getting out of the car-making business, except for the Mustang. By 2021, Ford’s entire product line will be trucks, SUVs plus the Mustang.

According to the same report from Autodata, full-size trucks accounted for 40 percent of sales in April (for Ford, GM and FCA). Merely five years ago, sedans outsold trucks by more than a half million units.

My, how the consumer trend has changed. But this shift is coming at the worst time for Ford and other auto manufacturers. Demand is high, financing is aggressive, but trucks aren’t being made.

This is likely just a short-term problem, but also realize that the 13th generation F-150 is soon to be replaced by the next generation. Ford has their scheduled plant shut down in August to reset for the next generation 2021 F-150. Just how many 2020s can they produce between now then will determine a lot for the rest of the summer for car dealers.