2013: The Year of the truck?

Competition heats up in posh yet tough pickup market

1/21/2013

BY TYREL LINKHORN
BLADE BUSINESS WRITER

Ford officials say the technology-packed Atlas concept truck, at the auto show in Detroit, represents the future for pickups.

The Blade/Andy Morrison
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Ford officials say the technology-packed Atlas concept truck, at the auto show in Detroit, represents the future for pickups.

DETROIT — When it comes to pickups, no one is shrugging off the Atlas.

The technology-packed concept truck — lowered from the ceiling during Ford’s press conference last week — ensured that Ford wouldn’t be outdone at the truck-heavy North American International Auto Show.

Not that Ford was likely to be forgotten. The F-150 has been America's top selling truck for 36 years running.

But competition in the always cut-throat pickup market seems bound to intensify in 2013.

General Motors has all-new versions of its Chevrolet Silverado and GMC Sierra that will go on sale later this year. Chrysler's Ram 1500 was refreshed in October and just hauled away North American Truck of the Year honors. And Ford plans to update the F-150, last refreshed in 2011, for the 2015 model year.

All are fighting to sell trucks that are more posh and fuel efficient than ever, while still retaining the toughness that the segment demands.

“The level of competition in pickup trucks is going to intensify,” Chrysler chief executive Sergio Marchionne said last week. “GM is launching a new vehicle. I think the market is going to be healthy, but I think it’s going to remain highly competitive.”

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Chrysler's Dodge Ram 1500 picked up the North American Truck of the year honors. Light truck sales for the Detroit Three were up last year, and Chrysler's Ram gained the most at 20 percent.

There’s an expectation by many that 2013 is going to be the year of the truck. In addition to new offerings, U.S. housing starts are forecast to rise this year.

“Historically truck sales have corresponded very directly with housing starts,” Ford spokesman Mark Levin said. With the pick up in the housing market, it looks like that’s a good indicator we’re going to have a strong year in truck sales.”

To be sure, neither housing starts nor truck sales are forecast to come in anywhere near the pre-recession boom years. But they are making solid progress.

Bill Brennan, executive vice president of the Home Builders Association of Greater Toledo, said final data isn’t in yet, but permits for new homes were up somewhere between 15 and 20 percent locally last year. He expects to see growth next year as well.

“I think the tie-in there is very logical,” he said. “A lot of builders do drive pickups and buy pickups for their businesses, and we certainly expect to see growth in activity. I think that will start to get builders and subcontractors back into the market that have been out of the market.”

Data from industry analyst IBIS World show light truck sales for the Detroit Three were up 8.4 percent last year, and have been trending up since 2010 after a six-year decline. Ram did the best, with Chrysler reporting a 20 percent gain.

"I’m pleased with what we've done. I think there’s more to be done," Mr. Marchionne told reporters, hinting that more announcements on the company's truck line are coming this year and next.

Ford said F-series sales grew 10 percent in 2012. GM reported flat Silverado sales and a small spike for Sierra. The light vehicle industry as a whole grew 13 percent.

IBIS World analyst Antonio Danova expects growth to continue, both for the industry and trucks.

“The boom in the construction housing sector may benefit truck manufacturers and increase sales. As long as gas prices aren’t so volatile, I think I see truck sales continuing to move up,” he said.

While high gas prices can tamp down truck demand, they don’t create the huge market swings like those seen in 2008. Part of that, analysts say, is that some people realized smaller vehicles just don’t fit their lifestyle and needs. But companies also are getting much more adept at making trucks that get respectable fuel economy without giving up much — if anything at all — in the way of towing and hauling capabilities.

Ford says it has sold more than 250,000 trucks with the turbocharged V-6 EcoBoost engine since making it available in 2011. Put another way, that makes up 43 percent of the brand’s total sales volume.

That level of success surprised even Ford, said Jessica Caldwell, a senior analyst with Edmunds.com.

Dealers say it’s no great surprise, but what people buy depends on gas prices.

“It gets more sensitive when gas goes to $4 a gallon,” said Rob Whitner, general sales manager at Brondes Ford Toledo. “When it gets down to $3 we don’t hear much about gas mileage. But we’re selling both. Some guys won’t go to a six-cylinder.”

Mr. Whitner said Brondes is looking for a good year in truck sales, which is good for the bottom line.

“Frankly, the money's in truck,” he said. “There’s more margin in trucks.”

Though Ford has been the most rigid applicator of technology to better fuel economy, GM and Chrysler have both moved considerably in that direction with their most recent redesigns.

General Motor's GMC Sierra reported a small spike in light-truck sales in 2012. The whole light-vehicle industry grew last year by 13 percent. this year the forecast looks even better.

GM says its engineers did considerable work on aerodynamics to reduce drag on the 2014 trucks, helping to eliminate wind noise and give better fuel economy.

“Pretty much every bit of the truck’s been updated,” company spokesman Tom Wilkinson said. “They reflect what truck customers what. They're looking for trucks that are more refined, quieter, more efficient. But they also want more horsepower, more torque, and more towing capacity.”

All GM’s new trucks will have cylinder deactivation for better mileage. GM says its the first time it has offered the technology on the six-cylinder.

Horsepower and fuel economy numbers haven’t been released yet, and GM isn’t offering any guidelines, but Mr. Wilkinson said figures will be better across the board.

The Atlas concept takes EcoBoost even further, offering start-stop technology that shuts off the engine when the truck is stopped in traffic. It also has several aerodynamic cues to reduce wind resistance, including active shutters in the grille and wheels that close at highway speeds to reduce drag.

Company officials say the chiseled and aggressive-looking Atlas represents a “future vision” for pickups.

“The innovations we show on the Atlas concept are all possible at some point in the future, but we haven’t committed to when and where they might show up,” Mr. Levine said.

Ram also got into the fuel efficiency game with its most recently revamped truck that went on sale in October.

In addition to more aerodynamic styling, the trucks were given Chrysler’s V-6 Pentastar engine that’s more fuel efficient and powerful than the previous V-6. They also got an eight-speed automatic transmission.

Ms. Caldwell also expects truck sales to rise in 2013, though she's not sure they'll outpace passenger cars. One possible threat to traditional truck sales in the future? Vehicles like Ford's new Transit Connect commercial van.

“Those are pretty attractive commercial light vehicles," she said. "If I’m thinking I'm in the truck market and I didn’t necessarily need a pickup truck, that would be great vehicle to have.”

Contact Tyrel Linkhorn at: tlinkhorn@theblade.com or 419-724-6134.