House boom to trigger pickup sales

DETROIT (AP):Auto companies are betting on a surge in pick-up sales, now that home building is on the rise.

Chrysler said Thursday it is adding 1,000 workers to its Ram pickup factory, because it sees higher demand for the redesigned truck. Ford and General Motors also say truck sales are climbing fast after several years of small but steady growth.

Truck sales rise or fall with home construction, since they're the vehicle of choice for contractors and construction crews. And there are growing signs that home construction and prices are in the midst of a steady recovery, said Tom Libby, lead North American forecasting analyst for the Polk research firm.

For example, government data shows builders started construction on homes and apartments at the fastest pace in more than four years in September. They also requested the most building permits in four years, a sign that many are confident that home sales will continue growing. Another encouraging sign: home prices are rising in many markets.

"Almost every day there's another report of a positive measure," Libby said.

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Another reason sales could surge is the record age of trucks currently on the road. Ford Americas president, Mark Fields, said this week that 53 per cent of full-size pickups are now older than 10 years and 27 per cent are more than 15 years. Many of those trucks will have to be replaced soon.

"You can see there's a lot of pent-up demand out there," Fields said at an industry conference. "There could be a lot of opportunity."

Fields said full-size trucks have accounted for 11 per cent of US sales since 2009. That market share shot up rapidly in October to 13 per cent, according to Citi analyst Itay Michaeli. He expects demand at that level for the next few months, especially since gas prices have eased.

Ford's top US sales analyst, Erich Merkle, wouldn't say how much Ford has increased truck production to meet demand. But Ford's overall car and truck production is up seven per cent in the fourth quarter to 725,000. The F-Series pickup is the country's best-selling vehicle.

Chrysler CEO Sergio Marchionne is predicting higher Ram sales because of the truck itself. The new Ram, which just hit the market, can get up to 25 miles per gallon on the highway and has a host of new technology, including a system that automatically shuts down the truck at stoplights to save fuel. Ram sales were up 20 per cent in October over the same month last year.

"I expect it to do really well," Marchionne said after a speech at Chrysler's Mack 1 Engine Plant in Detroit on Thursday.

New pick-ups from GM, due out early next year, will also pique buyers' interest. GM plans to release more details about the Chevrolet Silverado and GMC Sierra next month.