V-8 Engines on the Rebound, Or Dead-Cat Bounce?

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NEW YORK — Eight-cylinder engines have made a modest comeback in the last couple of months, fueled by high incentives on big trucks, and a slight moderation in the price of gasoline.

In May, eight-cylinders were as low as 13.6 percent of U.S. new-vehicles sales, according to the Power Information Network. That rebounded to 14.6 percent in June, 17.1 percent in July, and 18.5 percent in August.

However, the market is unlikely to go back to “pre-May” business as usual, said Tom Libby, senior director of industry analysis for J.D. Power and Associates, at the Auto Industry Hot Topics Conference here on Sept. 18, co-sponsored by J.D. Power and Standard & Poor’s.

“Large vehicles will be under severe pressure in the next year,” Libby said in a presentation. Extraordinarily high discounts boosted the recent increase in eight-cylinder models, including big pickups, he said. Chrysler has been offering 2008 Dodge Ram pickup trucks with such high incentives, they are essentially selling for half price, “which is a pretty significant incentive,” Libby said.

Nevertheless, Dodge Ram sales were down 22.7 percent in August from the year-ago month. Year to date, Dodge Ram sales were down 29 percent, to 175,246. An all-new Dodge Ram goes on sale this month for the 2009 model year.

Backed by big discounts, loyalty among buyers for all brands, who came out of a full-sized pickup and bought or leased another one rebounded from only 49.7 percent in May, to 71.8 percent in August, according to PIN data. That level of big-pickup loyalty is essentially back where it was in January and February, before gas topped $4 per gallon.

PIN downloads transaction information from thousands of dealerships daily, including transaction prices, finance terms, makes and models, basic buyer demographics, and more.

Rather than big trucks, growth in the near future is in segments like subcompact cars, including tiny models like the Toyota Yaris, Honda Fit and Chevrolet Aveo. That segment “exploded” from 2004 to 2007, Libby said. He expects to see that continue, on top of the 35 percent growth the segment has already experienced so far this year.

“I still see it growing,” Libby said. “It’s vastly outperforming every other segment.”

Tags: J.D. Power Associates, Incentive, Pickup, Sales Force Management, Sales Strategy, Financial Accounting, Sales, Finance, Jim Henry

Jim Henry has been writing about the auto industry from a business perspective for more than 20 years. He is also a member and past president of the New York-based International Motor Press Association.