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Truck Wars: Detroit Makers Battle Out in Industry’s Most Profitable Market Segment

Asians largely sitting on the sidelines.

by on Jan.22, 2013

Ford teases its next-generation F-Series pickup with the big Atlas Concept truck.

American motorists will have to wait a couple more years before they can get their hands on the next-generation Ford F-Series pickup.  But that didn’t matter much to Wall Street, investors driving up the maker’s stock following the unexpected unveiling of the maker’s Atlas Concept truck at the North American International Auto Show.

And for good reason.  The F-Series has dominated the huge pickup segment for 36 years running. But it’s got a tough fight ahead if Ford hopes to maintain that lead. General Motors used the Detroit Auto Show to reveal its next-generation Chevrolet Silverado and GMC Sierra full-size trucks. And during the show’s opening ceremonies, the new 2013 Ram 1500 was named North American Truck of the Year by a panel of 50 U.S. and Canadian journalists.

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Meanwhile, though they’ve repeatedly failed to crack the last key market segment dominated by Detroit, Japanese makers haven’t abandoned their own aspirations, Toyota and Nissan expected to make significant updates to their own trucks in the next few years.

“There is nothing more core to our business than trucks and we think we’re timing this very well,” Mark Reuss, GM’s president of North American operations, said during a media sneak peek at the Silverado and Sierra models last month.

Few segments of the market were as badly hammered by the recent recession as full-size trucks.  Not only were contractors and other professional users forced to rein in spending but the “urban cowboy” buyers who had buoyed the pickup market in the 1980s and ‘90s had largely moved on.

The segment peaked at almost 17% of the total U.S. new vehicle market — or 2.46 million during the record year of 2004 – then crashed to barely 11% of an already depressed market, according to industry data, forcing makers to all but give away their products hoping to keep plants running on minimal production schedules.

But, “There are finally some signs of life,” says Joe Phillippi, automotive analyst with NJ-based AutoTrends Consulting.

While few expect to see the personal use market regain much momentum, Phillippi and other analysts believe there’s a significant amount of pent-up demand among traditional contractors, fleets and other work truck customers as the American housing market finally shows signs of life.  There’s been a particularly strong surge in demand along the East Coast as the region continues the massive job of rebuilding after Superstorm Sandy.

That could boost sales sharply in the near-future, analysts anticipating the full-size segment’s share could surge to 13% or more in the next year or two.

“The market is getting stronger,” said GM’s Reuss, but “it is very, very competitive.”

(GM reveals new Chevy Silverado, GMC Sierra pickups. Click Here.)

The pickup market is undergoing a number of notable changes.  For one thing, buyers are no longer looking for the stripped-down products of decades past.  Those old-fashioned metal or plastic instrument panels have been gilded with leather and aluminum accents.  Even the most basic cloth seats now can be ordered with seat heaters.  And the 2014 Chevrolet Silverado and GMC Sierra updates will get many of the high-tech infotainment and safety features more commonly found in up-market sedans or crossovers.

They even can be ordered with WiFi to easily allow an owner to conduct business on the road – the center console concealing a cavernous storage area big enough for hanging file folders and a large laptop computer.

“From a styling standpoint, the (2014 GM models’) exteriors are evolutionary, but the interiors are a huge uptick,” suggested analyst Phillippi.

Fuel economy, meanwhile, has become as significant an issue as anywhere in the industry.  Ford, for example, now ships about half of the current F-Series models with V-6 engines, whether a base powerplant or the more advanced 3.5-liter EcoBoost, a turbocharged mileage miser that can nonetheless match the towing capacity of the F-Series’ biggest V-8.

(For a closer look at the Ford Atlas Concept, Click Here.)

Ford didn’t provide many details about the next-generation F-Series, expected to reach market for 2015.  But officials confirm that fuel economy has been a major factor in the product development program.

“Part of our strategy is to put all our vehicles on a diet,” Ford COO Mark Fields told TheDetroitBureau.com, and insiders hint that the new truck will make much more extensive use of aluminum and other lightweight materials, potentially shaving as much as 750 pounds off the new model’s mass.

What Ford officials make no secret of is their commitment to maintain F-Series momentum.

“With 36 years as America’s best-selling pickup, we are absolutely committed to setting the agenda in the truck market,” said Ford’s global product chief Raj Nair.

The Detroit makers aren’t the only ones expected to battle for every sale.  Japanese makers have, despite bold promises, failed to gain much momentum in the full-size segment. But they insist they’re in it for the long-run, and with its next Tundra, Toyota is determined to gain a bigger foothold, as is Nissan when it updates the big Titan.

That’s good news for consumers – and in a variety of ways. The newest pickups are more rugged and durable than ever before, notes analyst Phillippi. And they offer more features than ever, especially when it comes to creature comforts. But the industry is also expected to battle for every sale and that’s likely to mean some hefty discounting, even on the latest models.  For buyers, that’s a no-lose proposition.

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