Fuel Economy Forcing Pickup Market Shakeup

Rising gas costs are moving market from pickups like this Ford F-150...

...to compacts such as this Mahindra diesel from India, coming in 2009.

By John O'Dell, Senior Editor

What a difference a few bucks make. The full-size pickup truck, once the cash cow of the domestic auto industry, seems to be on the way, well, not out, but certainly down.

They've become victim of soaring gas prices – although perhaps it would be more accurate to say they've been penalized by their own, inherent, fuel inefficiency.

To help cope, Ford Motor Co., whose F-Series has been the best-selling line of full-size trucks for years, is considering a downsized version of its F-150, according to reports in the Detroit News and the industry journal Automotive News.

And General Motors Corp. is reconsidering the future of the big pickup n a market study aimed at forecasting demand for full-size pickups and SUVs four years from now.

The study will help GM's product planners decide whether to continue pursuing the present shift toward fuel-efficient smaller vehicles and away from big trucks.

Falling Fast

Sales of full-size pickups in the U.S. are down almost 40 percent since 2005.

While full-size trucks once were purchased mainly as work vehicles, they gained ascendancy in the late 1980s and throughout the '90s as an alternative to the family car or van for many.

Ford, GM and Chrysler controlled the market – it wasn't until the Nissan Titan debuted in 2003 that there was a significant import brand challenge – and were able to rake in big profits as sales rose because they had long since amortized the cost of their trucks.

Analysts estimated that, at the peak of market demand, when $35,000 and $40,000 pickups with navigation systems, leather upholstery and other luxury touches were selling as fast as the factories could roll them out, the Big Three automakers' averaged a $9,000 per truck profit.

Back to Basics

But as gasoline steadily approaches $4 a gallon – some believe it could hit and stick at $5 to $6 by 2012 – sales of big trucks are plummeting, and the market is returning to its roots.

Large pickups fell to an all-time low of 11.2 percent market share in April, down from a high of 18.6 percent in July, 2005, said Edmunds.com analyst Jessica Caldwell.

"We may see a little rebound later this year with the introduction of the new (redesigned) F-150 and Dodge Ram trucks," she said. "But we think a lot of them will be sold as replacement trucks to people who use them for work and have been hanging onto an old model for a long time. We're not so sure we'll see many new buyers get into this market now."

Rising fuel prices and large trucks' notorious thirst means "a lot of the wannabes, the weekend cowboys, will be forced out" of the light-duty pickup market, said James Hossack, an industry analyst and consultant at AutoPacific Inc. "Sales are going to go down quite a bit."

The big market potential, he said, is in the kind of pickup that stormed the market in the 1980s, the basic compact "with roll-up windows, a four-cylinder engine and decent fuel economy."

Good Timing

The domestic auto companies may be working on trucks like that, but Hossack thinks India's Mahindra and Mahindra, which announced plans earlier this year to brings a compact pickup to the U.S. in 2009, may be first to dive back into that market.

"It may be a case of luck beating skill," Hossack said, "but Mahindra may get here at just the right time."

Ford won't discuss future product plans, but the news reports, citing inside sources, says that the automaker is developing a model called the P525 that will be built on the F-150 platform but will be about 10 percent smaller and "significantly" lighter thanks to use of aluminum body panels and thin high-strength steel in the frame.

The truck, which could be marketed under the F-100 name – resurrecting a marque that was Ford's entry-level pickup until the compact Ranger was introduced in 1983.

Ecoboost Engines

Ford likely would use its new turbocharged six-cylinder Ecoboost engine as the mainstream power plant for the new truck.  Ford says such an engine would deliver the hauling power of a V8 with the fuel-efficiency that's better than that delivered by most V6 engines today.

The new compact being developed for markets outside the U.S. likely would use a four-cylinder version of the Ecoboost.

Importing it to the U.S. would require a major redesign as the present "global" compact pickup was not designed to meet U.S. safety standards.

Ford is scheduling production of both new trucks for 2011, according to the news reports.

GM hasn't leaked much info about its future pickup plans, but industry analysts expect that it, too, could have a lightweight, downsized truck in the wings, ready to go into development if the company's new study shows that demand for standard pickups is going to continue falling.

If?????

Posted by

John O'Dell May 20, 2008, 1:07 PM

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Chrysler, Ford, General Motors, India, Mahindra