Do Ford’s High Fleet Sales Make the Tundra Look Bad?

Last Friday, I received a note on our article that asked “What happened to the Tundra?” from Jason Lancaster, administrator of TundraHeadquarters.com that prompted me to take a closer look at whether I was missing an angle in my high-level annual sales analysis of the full-size pickup market from 2007 through 2010.  In the original article, I noted that Ford has been eating everyone else’s lunch, and that Toyota in particular has taken it on the chin.  Jason’s contention is that I painted with too broad of a brush when drawing my conclusions about the Tundra (which, by the way, I never said was a failure; I just want to know what happened to it).

As a website owner and more than just a commenter, Jason has the ability to offer more of a voice than someone who typically comments on something we post would.  His additional analysis can be found here.  After reading his work, I had a few additional comments.  When I was around the 375 word mark in my comment on TundraHeadquarters, I decided that rather than giving him content for free, I’d just write another article about it for Full Metal Autos.

While I didn’t address the fleet vs. retail mix in my original article, according to Jason’s assumptions, the Tundra’s market share has fallen similarly when looking at the total number against your retail only estimate.  The Tundra’s 2010 total market share is 75% of its 2007 market share.  The Tundra’s 2010 retail market share is 76.2% of its 2007 share.

At the same time, the F-150’s 2010 total market share is 122% of its 2007 total market share, and its 2010 retail share estimate is 124% of its 2007 retail share.  So there’s not much of a difference with either truck in this respect.

So while its retail share is higher than its overall share, it has fallen very much in line with the truck’s overall share decline.  You can see when comparing my original Overall Share numbers with the Retail Share estimates calculated by TundraHeadquarters, the big difference between the all-in share and the retail-only share estimates is that the Tundra’s retail share is a not-insignificant 2.4 percentage points higher than its overall share.  Put another way, its retail share is 34.8 percent higher than its overall share.  In contrast to the Tundra and Titan having larger retail share than overall share, the opposite is true of the GM, Ford, and Ram trucks, which of course means that the domestic brand trucks are showing a higher overall share due to fleet sales.

As the folks at TundraHeadquarters point out, fleet sales clearly aren’t as ideal as retail sales.  But there are different kinds of fleet sales, and some are worse than others.  Daily rental fleet sales are the least desirable; sales to commercial fleets (which I suspect is where the majority of F-150 fleet sales are going) aren’t as bad.  Those former are dumped into the used-car market relatively quickly and are driven by scores (if not hundreds) of different people.  The latter are typically driven by the same person, or a small pool of people, and stay in service until they wear out.  So when Ford’s sales analyst proudly trumpets that the F-Series is the bestselling fleet vehicle, he’s not referring to a percentage of sales, but pure volume.  Since the F-Series is the highest-volume vehicle sold in the US, it already has a huge head start in becoming the fleet sales champ.  And, since nobody knows exactly what the F-150’s fleet makeup is (either as a percent of sales, or a breakdown among the types of fleet sales), we have to either rely on assumptions or use the overall sales figures.  That being said, I’d kill to get access to the type of data I found when I wrote this article about fleet queens in 2007.

Don’t think for a minute that Toyota wouldn’t LOVE to get a piece of Ford’s fleet action by selling to contractors and government agencies and the like if they could.  Fleet sales aren’t as good as retail sales, but they’re better than no sales.

So as a percent of its total sales, it’s quite likely that Tundra retail sales are larger than the F-Series’ retail sales.  But does that really change the point of my original piece?  Jason’s conclusion at TundraHeadquarters begins with:

I don’t know what the exact truck fleet mix is for each manufacturer in each model year, but neither do the fine folks at AutoSavant when they argue that the Tundra’s market share is falling. All they can do is roll retail and fleet sales into one big pile and then draw conclusions that, frankly, shouldn’t be drawn.

I disagree that the conclusion shouldn’t be drawn.  Even Jason’s retail share estimates show a significant drop in the Tundra’s market share, from an estimated 12.2 percent in 2007 to 9.3 percent in 2010.  That’s against the backdrop of lower overall full-size pickup sales in 2010 than in 2007.  According to TundraHeadquarters’ own estimates, the Tundra has lost a quarter of its retail share over the past four model years.

Based on conversations with folks in Toyota sales, I’m of the opinion that the Tundra’s share of the retail market place is only slightly lower than it was in 2007. This would explain why Tundra’s resale values remain high (consumers still trust the brand), for example, and it might also explain why Ford resorts to massive incentive spending every August to maintain their sales crown. If Ford’s share were really growing so strongly, why would they offer as much as $7500 back on a new truck? Seems like profitability would come first if market share were really increasing so rapidly.

Bottom Line: When Joe Consumer sits down to buy a new pickup, he’s likely giving just as much consideration to the Tundra now as he did 4 years ago. There’s not enough data to support the conclusion that Toyota has somehow “failed” with the Tundra.

That’s his bottom line.  And mine is that my original editorial began with the presumption that Tundra sales are not meeting expectations, simply because Toyota’s aggressive plans for the Tundra five years ago have not materialized.  The presumption that my earlier piece began with was that something is wrong with Tundra sales, so it asked “what happened to the Tundra?”  Heck, Jason Lancaster himself said in 2007 that Tundra sales were not meeting early expectations.  He didn’t dig into market share, fleet sales, or any of those details at that time.  And again, I did not use the words “fail” or “failed” in my original article a single time.

It’s clear from what Toyota executives said (and did – with the huge production capacity that they built for the Tundra, and which was later dismantled) that Toyota was hoping for more from the Tundra.  The Tundra’s sales are not strong relative to its peers, and the Tundra has lost more of its pre-recession sales than all of its competitors have, save Nissan.  To pretend that Toyota is somehow satisfied with Tundra sales at the 100,000 mark when the 200,000 number was thrown around with abandon a few years ago sounds more like fans of the Tundra perhaps giving their favorite truck more credit than is due.

If the answer to the Tundra’s falling sales and market share is that the competition is dumping trucks with huge rebates (and citing a limited-eligibility, Chicago-only model-year-end $7,500 Ford rebate 10 months ago as proof), that doesn’t explain why a Tundra CrewMax 4×4 Limited and an F-150 SuperCrew Lariat Limited 4×4 each have identical $2,000 rebates today in my Zip code, according to CarsDirect.com.

Regular readers know that we have no axe to grind with any manufacturer.  We have a balanced perspective on the auto industry, and if the Tundra fans want to accuse me of favoritism for Dearborn’s finest, they may want to talk to the guy who accused me of being a “GM fanboi covering Ford” after I gave the Lincoln MKS an unfavorable review.