Is Ford’s Truck Sales’ Slump The Start Of The “Buyer’s Strike” In Autos?

We couldn’t help but notice that Ford Motor’s sales of gas-guzzling vehicles plunged in the first quarter compared with last year. This could be the start of demand destruction as consumers gravitate to more fuel-efficient cars or sit on the sidelines. Low inventory from semiconductor shortages, soaring fuel costs, and higher interest rates could be creating the perfect storm of a ‘buyer’s strike.’ 

Ford Motor’s first-quarter sales of new US vehicles tumbled 17.1% from a year ago to 432,132 vehicles. Auto website Edmunds.com said sales were in line with expectations. In March, the Detroit-based auto manufacturer sold 159,328 vehicles across all brands, a 26% plunge from a year ago, which coincided with record-high gas and diesel prices at the pump following the invasion of Ukraine. 

Compared with industry peers, Ford’s quarterly sales were worse on a percentage basis than Stellantis and Toyota but not as bad as General Motors. 

Ford continued to blame semiconductor chip shortages on the sales woes for the quarter. 

“I think the global semiconductor chip shortage continues to create some challenges for Ford and the industry. But keep in mind the industry wasn’t experiencing quite the same chip challenges last year as it’s having this year,” Erich Merkle, head of US sales analysis.

By model, sales of SUVs, trucks, cargo vans, and sports cars in the quarter took a hit. 

F-Series down 31% to 140,701
Ranger down 27% to 17,639
Transit down 37.3% to 17,211
Ford Mustang down 19% to 13,986
Explorer down 34.5% to 42,736
Expedition down 56.3% to 9,718

The Bronco Sport, Ford Edge, and all-electric Mustang Mach-E recorded growth. 

Bronco Sport saw a 24.5% growth to 29,089 vehicles
Ford Edge saw 19.2% growth to 26,412 vehicles
All-electric Mustang Mach-E saw 1.8% growth to 6,734 vehicles

Record high fuel prices at the pump could be swaying consumer behavior on future car purchases. Remember when fuel prices spiked ahead of the 2008 crash, and people gravitated away from their Suburbans and H2 Hummers to more economical hybrid electric vehicles, such as the Toyota Prius. 

Morgan Stanley analyst Adam Jonas points out what could be the emergence of a “buyer’s strike” in autos. He said the US car market is “not a car market at all. It’s a truck market.”  

Jonas penned a note Friday that, per his conversation with auto dealers, initial signs of demand destruction could materialize in lower-income customers buying “gas-guzzling vehicles.” He said rising fuel prices and low inventory at dealerships might sideline consumers. 

Jonas also believes that inflation and rising gas prices would help spur a buyer’s strike. 

So is this the point where consumers give up on purchasing trucks and SUVs because they can’t afford to pay for record-high fuel? If so, what do people buy? Well, for one thing, they can’t afford Teslas because they’re too expensive, and prices are being consistently hiked due to rising industrial metal prices for batteries.