General Motors has big plans for its next generation of full-size SUVs – and not just in the traditional U.S. market for models such as the Chevrolet Tahoe, GMC Yukon Denali and Cadillac Escalade.
The automaker expects to export more than a quarter of the big sport utility vehicles it plans to build at its re-tooled assembly plant in Arlington, Texas when the new 2015 models launch production in the months ahead.
“Twenty-five percent to 30 percent of the vehicles will be exported,” predicted Jeff Luke, GM executive chief engineer for full-size truck and sport utility vehicles. “They do real well in the Middle East. I was in Dubai (recently) and all the police agencies were using them,” he said.
And the maker sees other opportunities abroad, Cadillac’s global market chief Bob Ferguson suggesting there are “very good” opportunities for the brand’s new Escalade in China once it goes into production next spring.
(Click Here for a closer look at the new 2015 Cadillac Escalade.)
GM expects to begin building the Chevrolet Tahoe and Suburban and the GMC Yukon and Yukon Denali models next January, several months ahead of the more luxurious Cadillac ‘Slade, as it has come to be known within hip-hop and professional athletic circles that make up a large part of the customer base.
GM unveiled the new 2015 Chevrolet Tahoe and Suburban and Tahoe and GMC Yukon during gala events in New York and Los Angeles last month and returned to New York this week to unveil the new 2014 Cadillac Escalade, which GM will subsequently show off at key auto shows in Miami and Los Angeles.
(Check out the 2015 Chevrolet Tahoe and Suburban and GMC’s Yukon. Click Here.)
GM truck engineering executive Luke said the Arlington plant is tooled to build roughly 200,000 of the big sport utility vehicles and GM expects to sell all of them. Cadillac manager Ferguson said he is confident the Escalade alone will generate “double-digit” sales gains after its long-delayed launch.
Sales of large, truck-based body on frame vehicles dropped 9% in the U.S. last year and sales of the Chevrolet Suburban, Cadillac Escalade and GMC Yukon continued to decline during the first nine months of 2013 — though longer wheelbased versions of all three vehicles have increased to offset the decline of core models, according to GM’s sales records.
Luke said sales of the Chevrolet Tahoe police package have begun to grow since the Ford Motor Co. finally stopped building the ubiquitous Crown Victoria. Many police agencies, among them the huge New York Police Department, have bought Tahoes to replace the old Crown Victoria, Luke said, adding the demand for the Tahoe police package is also coming from overseas.
(Click Here to find out why GMC owners pay more per mile to run their vehicles than for any other brand.)
GM’s success in selling its big SUVs, which are also popular with livery fleets and companies that specialize in armoring limousines and other vehicles, adds to the steady growth of exports from automobile plants in the U.S.
Once an also ran in the export game, a growing number of vehicles are being exported from American assembly plants. But foreign-owned brands, such as BMW, Honda, Toyota and Nissan, lead the push, rather than GM and its rival Detroit makers.
(U.S.-based automakers ramp up exports, but Detroit lags European, Japanese brands. Click Here for the full story.)
GM also expects to export the new Stingray Corvette, while Ford is planning to export the next Mustang when it is finally revealed next year. And Chrysler is steadily ramping up exports of Jeep-brand vehicles from plants in Toledo and in the heart of Detroit.
While GM has gradually recognized the advantages that accrue from selling overseas, the potential benefits of globalizing sales of vehicles like the Tahoe, Yukon and Escalade are substantial.
“GM makes some money now from its cars,” said Joseph Phillippi, an independent analyst based in New York, “but the lion’s share of the profits come from the truck portfolio,” he said.
The importance of exporting full-size SUVs isn’t disputed by GM executives. And it can offset the domestic decline of the segment, which has shrunk from about 4.7% of the American market in 2001 to 1.9% last year, noted Luke.
But it is still competitive, the executive stressed, which is one of the key reasons for the big investments GM has made in those new models. And despite competition from a broad range of makers including Ford, Toyota, Lexus, Nissan, Infiniti and Range Rover, profits remain solid.
“While they may lack the flash of luxury cars, GM’s full-size SUVs can command the same rich prices. The sticker of a fully tricked-out Yukon XL Denali, for instance, can approach $70,000. GM’s big SUVs boast an average transaction price of $52,587—larger than the average U.S. purchase for BMW, Toyota Motor’s Lexus brand, and the Audi luxury line,” the Bloomberg news service noted recently.
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