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Competition Drives Large Pickup Truck Segment Market Share

September 21, 2007

WESTLAKE VILLAGE, Calif. — Challenges within the automotive industry coupled with fierce competition among automakers are driving large pickup truck net prices closer together and leading to a 20-month high in market share, according to J.D. Power and Associates.

The large pickup truck segment comprised 14.9 percent of new-vehicle sales in August — the largest share of the market for the segment since December 2005.

Incentives had much to do with the large pickup segment's success in August. Total incentive spending per unit in the large pickup segment averaged $4,500 in August 2007 — the highest of any month since July 2006.

"Incentives played a major role in large pickup sales in August," said Tom Libby, senior director of industry analysis at PIN. "The heightened competition in this truck segment has caused a convergence of net prices, and the gap between prices for the seven large pickup models has narrowed from $4,800 in January 2007 to $3,400 in August."

Incentive spending may have also impacted large pickup truck owner loyalty in August. Loyalty among owners of large pickups was 74.2 percent in August — the second-highest level in the past 20 months.

"We expect the aggressive incentives that we saw last month to continue if volumes are to be sustained," said Bob Schnorbus, chief economist at J.D. Power and Associates. "The decline in the housing market is clearly having an impact on the auto industry, and pickups may be the most directly affected segment. With consumers fearing further declines in the housing market, the large pickup segment will continue to face considerable challenges, and incentives will be critical in softening the blow in the months ahead."

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