Big-3 Fighting to Retain Truck Market Dominance Web source: http://www.forbes.com/columnists/2006/04/17/trucks-sales-minivans-cx_jf_0418flint.html Backseat Driver Carrying A Heavy Burden Jerry Flint, 04.18.06, 6:00 AM ET New York - More than half of the passenger cars sold in the United States wear foreign nameplates. General Motors, Ford Motor and American Chrysler still hold the truck side of the business, but the foreigners are aggressively going after this part of the market. And the home team seems to be repeating many of the same mistakes it has made in the past. Asian carmakers now own more than 40% of the minivan market, sell more than half the small pickups and lead in sales of car-based "crossover" sport utility vehicles. When American auto executives complain about losing sales to other manufacturers, they never mention their own ineptitude in being unable to build a winning small pickup, crossover SUV or minivan. Let's start with minivans. DaimlerChrysler (nyse: DCX - news - people ), which is still the industry leader, sells minivans under the Chrysler and Dodge banners. GM (nyse: GM - news - people ) divisions Chevy, Pontiac, Buick and Saturn all sell variations of the same minivan. And it's a similar story at Ford (nyse: F - news - people ) and its Mercury dealerships. Minivan Sales: First Quarter 2006 Company Q1 2006 Sales DaimlerChrysler 97,612 Toyota Motor 40,390 Honda Motor 39,204 General Motors 28,384 Kia 17,111 Ford Motor 16,616 Source: Automotive News Including Nissan (nasdaq: NSANY - news - people ) and Mazda, the U.S. minivan market is good for 250,000 units per quarter. And the Asians are soon likely to exceed their 43% share of this market. Kia now sells more minivans than Ford, and Hyundai, which controls Kia, is getting its own version of Kia's vastly improved second-generation minivan. Nissan spent millions on midcycle revisions of its Quest minivan, which will soon be in showrooms. Chrysler is fighting hard to protect its minivan business and wisely spent hundreds of millions of dollars to add a fold-flat floor. The company is not too far away from launching its next-generation minivans. In contrast, GM and Ford have never gotten minivans right. Ford may even abandon the minivan completely, though it reportedly has some other kind of people-mover in the works. GM has not said much about its plans, either. In 20 years, GM and Ford have failed miserably in minivans. Toyota Motor (nyse: TM - news - people ) and Honda Motor (nyse: HMC - news - people ) didn't get it right with their early minivans, but they stayed with the business and eventually brought top-notch vehicles to market. Big pickups are still a bright spot for Detroit. GM's nameplates include the Chevrolet Silverado and GMC Sierra, and Ford's figures (below) are for both Ford and Lincoln pickups. Big Pickup Sales: First Quarter 2006 Company Q1 2006 Sales Ford Motor 203,399 General Motors 191,375 DaimlerChrysler 90,386 Toyota Motor 31,825 Nissan 21,277 Source: Automotive News Of the 538,000 first-quarter sales of big pickups, Toyota and Nissan together currently hold only 10% of the market. Toyota's share will climb next year, as it is introducing a new, bigger pickup and constructing a second factory to build it. Of the domestics, GM is best prepared to deal with this onslaught; this fall it will start rolling out new vehicles. All these developments might put some pressure on Ford and Dodge, but they will not threaten Detroit's dominance--at least not yet. Small pickups are a different story. Toyota, Nissan and Honda--all with new pickups last year--have won more than half of this market. Small Pickup Sales: First Quarter 2006 Company Q1 2006 Sales Toyota Motor 41,807 General Motors 23,867 Ford Motor 22,378 Nissan 19,824 DaimlerChrysler 19,008 Honda Motor 13,643 Source: Automotive News Ford's Ranger was the small-pickup leader, but the company let the truck age. I think Ford just gave up the market. In fact, it said it would shut its one small-pickup plant in Minnesota and wouldn't even say it would stay in the business. My guess is that Ford will eventually build a small pickup in another factory. GM brought out a new small pickup but inexplicably designed it so the company's inline six-cylinder truck engine doesn't fit; the biggest motor available is an inline five-cinder. GM's underpowered and plain-looking little pickup might be acceptable for Thailand--the market originally intended for this design--but not Texas. What about big SUVs? Detroit still rules here, but fewer people are buying Ford Explorers and Expeditions and Chevy Suburbans. The new and improved GM models coming out over the next few months will steal business from everyone else in this shrinking market. Crossovers SUVs are another problem for the domestic manufacturers. The Japanese got into this business out of necessity because, years ago, they didn't have big pickups to use as underpinnings for big SUVs. So they played catch-up by building SUVs off passenger-car platforms. While crossovers are not as good for towing or off-roading, they deliver a smoother and quieter ride on paved highways and use less fuel. With today's higher gas prices, crossovers are gaining market share. Crossover Sales: First Quarter 2006 Company Q1 2006 Sales Honda Pilot 33,866 Lexus RX 25,407 Nissan Murano 23,196 Ford Freestyle 16,842 Buick Rendezvous 13,363 Source: Automotive News The five crossovers listed above are among the top sellers, and all are ahead of their first-quarter 2005 results. Detroit was late getting into this market, and some of its early efforts, such as the Pontiac Aztec, were awful. But the catch-up is underway; both GM and Ford have new models in the works--some that will arrive this fall. In small SUVs, the Asians also struck first. But Detroit has come back strong with good vehicles. Small SUV Sales: First Quarter 2006 Company Q1 2006 Sales Ford Escape 42,268 Toyota RAV4 33,944 Honda CR-V 32,351 Chevy Equinox 22,606 Source: Automotive News This fight is raging. Toyota's new RAV4 will challenge Ford's Escape for leadership, and Honda will have a new CR-V next fall. Pontiac dealers now have the Torrent, a version of the Chevy Equinox, while the Koreans have several entries in this market. And Chrysler will bring out some smaller Jeeps later this year. It is clear that the truck market has become quite competitive across all segments. Detroit can no longer count on simply bringing a truck to market and then leaving it unchanged for years. It Detroit fails in trucks, it will not be because of labor, pension and health care costs. It will be due to plain old incompetence.
