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As tech changes auto industry, trucks still key for Detroit's Big Three

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The future of the automotive industry, as many observers see it, is in shared mobility, autonomous vehicles, connected cities, and electrification.

But even as U.S. automakers move forward with their technological moonshots, they still earn the bulk of their profits the same way they have for much of the last couple of decades — by selling lots and lots of pickup trucks.

“It’s a balancing act,” said Jeff Schuster, an analyst and forecaster with LMC Automotive.

That tightrope walk is especially stark at the moment, as automakers started January talking about autonomous mobility at the Consumer Electronics Show in Las Vegas and will end the month promoting their new pickups at the truck-heavy North American International Auto Show in Detroit. 

While that may seem at odds, Mr. Schuster said automakers need something to maintain profits now while providing enough cash for them to invest in the future. 

“That’s frankly what trucks are doing,” he said. “That margin is being leveraged to develop technology, and autonomy, and mobility in general. It is the fuel for the future.”

Ford, General Motors, and Fiat Chrysler each rely heavily on trucks. Almost 35 percent of Ford’s total U.S. sales came from its top-selling F-Series pickup last year. General Motors wasn’t far behind, with its four pickup lines comprising almost 32 percent of the company’s U.S. sales. Pickups were about 24 percent of Fiat Chrysler’s total U.S. sales.

Industrywide, the market share for pickups was around 16 percent in 2017.

Even so, experts are hesitant to suggest there’s too much of a reliance on pickups from the Detroit Three.

“That’s what the market is demanding right now. They’re making hay while the sun shines,” said Jessica Caldwell, an analyst with

Even as the overall new car market slipped last year, sales of pickups grew by 5 percent to 2.82 million, giving trucks their largest market share in a decade. Full-size trucks make up the bulk of the segment, though the mid-size segment is also growing. Toyota, for example, set a new annual sales record with its Tacoma.

That’s good news for automakers, who earn far more from selling pickups than they do cars. 

Estimates vary, but analysts generally say automakers enjoy a profit margin in the range of $8,000 to $13,000 per truck sold. An average sedan nets less than half of that. With some smaller cars, companies can struggle to turn a profit at all.

Those economics are a big reason why Fiat Chrysler elected in 2016 to kill off its only offerings in the compact and midsize sedan segment in favor of building more Rams and Jeeps. 

General Motors and Ford haven’t gone that far, but they unquestionably lean heavily on their sport utility vehicles and pickups, even as they charge ahead with revolutionary mobility programs.

On Friday, General Motors said it is seeking government approval to put a wholly autonomous car on U.S. roadways next year. Based on the electric Bolt, the car has no pedals or steering wheel. For the time being, the car would be relegated to ride-sharing fleet use. And earlier in the week, Ford announced a partnership with the California-based delivery service Postmates in which the companies will test making deliveries with driverless cars. Ford is also pursuing its own autonomous ride-sharing fleet.

At the same time, those companies are preparing to roll out new trucks that — while far more advanced than the pickups of 10 years ago — are still very much traditional vehicles.

Ford just shared the details on its soon-to-launch F-150 diesel and is rumored to be showing a new Ranger midsize pickup at the North American International Auto Show. Detroit debut or not, that vehicle is coming next year.

Meanwhile, both Fiat Chrysler and General Motors are set to show their new full-size trucks at this year’s Detroit Auto Show. Details about the new Ram have been kept quiet, though Chevrolet has already debuted the new Silverado at a surprise appearance in Texas earlier this month.

While some forecasters do see truck sales slipping a bit in the next couple of years, competition in the segment is going to remain as fierce as ever as GM, Ford, and Fiat Chrysler all angle for an edge.

“All three companies are going different ways. Ford went aluminum. GM will go for mixed materials. FCA will go for steel and 48-volt mild hybrids, like the Wrangler. These trucks will compete with more trims, better off road capability, more payload, more towing, improved fuel economy. No compromises is basically the theme,” said Dave Sullivan, an analyst with AutoPacific. “Over 90 million cars were sold [worldwide] last year, and there is nothing like the U.S. full size pickup market.”

Mr. Sullivan expects the full-size market to remain above 2 million sales annually for the next few years, but said automakers do need to be thinking several years down the road with their new pickups.

“This investment needs to carry them through the possibility of new presidents, new heads of the EPA, tighter emissions and CAFE regulations. This is a long-term play for GM and FCA. The bones of these trucks need to last at least a decade,” he said.

The media preview of the North American International Auto Show runs Sunday through Tuesday. The show, held at the Cobo Center in downtown Detroit, opens to the public Jan. 20 and runs through Jan. 27. Officials say they expect more than 750 vehicles to be on display.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com419-724-6134, or on Twitter @TyrelLinkhorn.

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