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Foreclosed Houses for Sale Pushing Down Pickup Sales

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By : John Cutts    99 or more times read
Foreclosed houses for sale have been pushing down sales of pickup trucks over the past few years across the country, according to auto sales analysts.

According to analysts at Ward’s AutoInfoBank, sales of pickup trucks typically sold at a rate of more than 200,000 a month, but when foreclosures began to increase, sales dropped and hit their lowest point in February this year when only about 89,000 units were sold. The total sales of 843,000 pickup units from Ford, GM and Chrysler for the first ten months of 2009 were 32 percent lower than total sales during the same period last year.

According to analysts, home sales and pickup truck sales have been directly and closely related because pickup trucks are the types of vehicles preferred by the home construction industry.

Additionally, pickup truck sales are crucial to the profit performance of the Big Three auto manufacturers because pickups sell more than smaller cars by an average of $30,000 and therefore generate more profits for the car makers. Pickup sales comprise 22 percent of the total sales by the Big Three and 91 percent of their pickup sales are made to buyers within the country.

According to Mike DiGiovanni of General Motors, pickup sales are important to GM, which has sold 261,142 units of its best-selling Chevy Silverado this year, but still 33 percent lower than Silverado sales last year.

While the overall number of foreclosed houses for sale dropped in October and November and total sales of new homes increased in October, the number of homes constructed in October dropped by 10.6 percent, more than what was expected by home construction industry analysts. The total number of building permits, a major indicator of construction activity, also dropped by 4 percent.

Erich Merkle, head of Michigan-based consulting company, said that construction firms are struggling and those that are still able to build homes are getting by with their old trucks.

In Las Vegas, among the hottest home markets during the boom, pickup sales dropped sharply as home sales declined. Home builder Kevin Haner said that three of his pickups are already old, but he will not replace them until his home construction picks up. Despite offers of zero-percent financing for pickups, he said he is still uncertain about the economy.

Based on data from analysts, weak sales of pickup trucks will continue to batter carmakers if large numbers of foreclosed houses for sale continue to impede home construction firms from building new homes.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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