Mark Reuss can’t remember a time when Ford Motor Co. and General Motors Co. had such drastically divergent strategies for their pickups.
Reuss, GM’s North American president, admits his company is taking a risk with its three-size truck strategy across two brands. Smaller pickups, GM believes, will offer customers a greater number of options and help the Detroit-based automaker meet federal fuel efficiency standards.
But Reuss isn’t afraid that GM’s strategy won’t keep pace with Ford’s, which includes one popular nameplate — the F-Series — and a huge gamble on aluminum parts to help its trucks shed weight to meet the same fuel economy targets.
“It’s wild,” Reuss said in a recent interview. “I’m loving it.”
GM and Ford have important truck debuts at next week’s North American International Auto Show: GM, Sunday, will re-introduce the midsize GMC Canyon pickup — sister of the already unveiled Colorado. The two are being added back to its lineup. On Monday, Ford will unwrap its next-generation F-150, a truck much lighter than the current model thanks to more extensive use of aluminum in the body.
The market segment of smaller pickups — known as midsize trucks — has declined for decades. And extensive use of aluminum in pickups is an untested approach. While truck owners are overwhelmingly brand loyal, there’s a real chance GM or Ford — or both — is choosing the wrong strategy for some of their most profitable vehicles.
“This could be a defining moment for Ford and the truck segment as a whole,” said Alec Gutierrez, an auto analyst at Kelley Blue Book, in a telephone interview. “One possibility is that brand loyalty holds true and F-Series holds steady. Ford could have a winning formula they actually start to conquest buyers. Or maybe the trucks don’t hold up as well, and Ford starts to lose share.”
Ford’s F-Series is the king of trucks. Its full-size F-150 has been the best-selling vehicle — car or truck — in the U.S. for 32 consecutive years. And in 2013, despite the fact that Ford had the oldest of the Big Three’s major truck offerings — including the F-150, GMC Sierra, Chevrolet Silverado and Chrysler’s Ram — Ford extended its lead over GM compared to 2012.
“Ford is subdividing the F-150 lineup to reach buyers and GM is using a multi-vehicle approach across the entire pickup segment,” said Jeff Schuster, senior vice president of forecasting for research firm LMC Automotive, in a telephone interview. Both could be successful approaches, he said, but “it’s not a slam dunk in either case.”
Midsize pickup gamble
Ford and GM offer full-size and heavy-duty trucks. The difference is that GM plans to boost its fleetwide fuel efficiency numbers in part through midsize trucks, which historically have been only slightly more efficient than their full-size counterparts. GM’s new midsize trucks should sip considerably less fuel when they go on sale this year.
Presently, none of the Detroit automakers has a small pickup offering.
The Canyon and Colorado went out of production in mid-2012. Ford stopped building its Ranger in late 2011, but still offers it in other corners of the world. Chrysler Group LLC axed the Dodge Dakota midsize truck that same year, and Chrysler’s Ram brand has shelved any plans to build a midsize truck, said spokesman David Elshoff.
LMC’s Schuster said Chrysler had been considering a smaller truck, more like Honda Motor Co.’s Ridgeline. Honda said it will debut a new Ridgeline within two years and Schuster said it’s possible more automakers could look at smaller trucks to win younger buyers.
But Erich Merkle, Ford’s U.S. sales analyst, said in a telephone interview, “If there was truly demand for small pickups, you’d have more activity in the segment.”
GM is banking on a midsize truck segment that has declined precipitously for nearly three decades. GM believes it can attract buyers who switched to vehicles such as crossovers, those with an older small pickup or people who drive a full-size pickup today.
In 2013, automakers sold just over 227,111 midsize pickups, with nearly all sales split between Toyota Motor Corp.’s Tacoma and Nissan Motor Co.’s Frontier. Those numbers are down from the small truck segment’s peak of about 1.4 million in 1986.
IHS Automotive predicts the midsize truck segment will grow from about 1.6 percent of sales today to 1.9 percent or 2 percent of the industry by 2015 or 2016.
Reuss said federal fuel economy regulations are part of GM’s business decision to offer midsize trucks.
In 2016, automakers must meet Corporate Average Fuel Economy ratings of 35.5 miles per gallon in the U.S.
He said the Colorado is some 900 pounds lighter than the Silverado. Jeff Luke, GM’s chief truck engineer, said the anticipated EPA sticker figures will top the fuel economy of the Silverado, Sierra and old Canyon and Colorado, which at best hit 25 mpg on the highway.
“If you look at this graphically and mathematically, you can’t get to an efficiency place that this truck is going to offer no matter what you do to a full-size pickup truck,” Reuss said during an interview with reporters at the LA Auto Show at which Ford executives were seen checking out the Colorado. “And so if you try and do it, all you’re doing is adding cost and not getting the return of the mass out of it.”
Ford thinks differently, and although its goal is not to match the weight differential between GM’s full-size and midsize trucks, it could come close. The Dearborn automaker wants to shed at least 250 pounds — and upward of 750 pounds — from each of its vehicles to boost fuel efficiency.
The use of more expensive aluminum on the F-150 could erode some of Ford’s profits, which can reach to the five-figures on F-Series. But because Ford’s trucks are so popular and as manufacturing volume increases, the per-vehicle cost of materials should theoretically decrease.
GM also is likely to relinquish profits on its smaller pickups, though likely not to the same extent as Ford, because GM’s small trucks will make up a small percentage of the automaker’s overall sales.
“Ford’s at greater risk of seeing their margins erode,” Kelley Blue Book’s Gutierrez said.