Auto Makers Hitch Wagons to Booming Truck Market
The big American auto makers all unveiled brand-new or completely redone trucks in the last week to cash in further on the high-profit truck market, which is growing even as the overall U.S. market shrinks.
Ford Motor Co.’s new Expedition and Lincoln Navigator sport-utility vehicles, General Motors Corp.’s Hummer H2 SUV and the super-performance Dodge SRT-10 pickup truck from DaimlerChrysler’s Chrysler Group all are designed to tap into America’s growing love affair with trucks, big and small.
But the American brands are not alone.
This week at Detroit’s annual North American International Auto Show, Lexus pulled the wraps off its GX470, Honda Motor Co. introduced the Pilot, Mercedes revealed the GST, Volvo showed off its new XC90, and Land Rover presented the new Range Rover. All are SUVs set to hit the U.S. market this year or early in 2003.
And all of them join an ever-increasingly crowded truck market jostling for consumers’ dollars. “The truck segment is growing in part because it is the segment the imports are just starting to develop products for,” said Wes Brown, an analyst with Nextrend, a Thousand Oaks auto-market research firm.
Ford hopes the 2003 Expedition, with its sliding second-row seats and one-touch power fold-down rear seats, will revive Ford’s lackluster truck sales, which have lost considerable ground in the last few years. Expedition sales fell 16.6% in 2001, relinquishing the crown of best-selling full-size SUV to the Chevy Tahoe.
“The Expedition is a very important product; dealers are counting on it,” said James Padilla, Ford’s head of North America. “Trucks are 60% of Ford’s total volume, so it’s very significant. I think with the product content and quality we’ve added, we’ll be right in there.”
Light trucks--pickups, SUVs and minivans--outsold passenger cars for the first time in the U.S. last year, accounting for 51% of the market, and SUVs have been the fastest-growing segment.
Baby boomers, the generation with the wealth to afford increasingly expensive luxury SUVs and pickups, are getting older and “more appreciative of the extra room and comfort” that a truck can provide, said George Peterson, president of AutoPacific Inc., an auto industry consulting firm in Tustin.
And imports are muscling in on truck territory with full force. Toyota Motor Co. matches the Big Three in every truck category and then some, with full-size and compact pickups, five Toyota-brand SUVs including two built on passenger-car platforms, and as of this week, three Lexus SUVs.
Toyota’s truck factory in Indiana churns out full-size Tundra pickups and Sequoia SUVs. Nissan has broken ground for a plant in Mississippi to build similar trucks, and Honda is finishing a plant in Alabama to build minivans and another undisclosed truck product.
Vehicles such as the Tundra and SUVs such as BMW’s X5 and Nissan’s “no-frills” Xterra have provided alternatives to passenger cars and relief from the ordinariness of pickup trucks such as the Ford F-Series and Chevy Silverado, or Jeep Cherokee in every other garage, Nextrend’s Brown said.
Lexus on Sunday introduced the GX470, a step above its popular RX300.
“Lexus, being part of Toyota, never lets up with new products,” said Tom Libby, director of industry analysis with J.D. Power & Associates in Detroit. “If you look at the lineup of Lincoln and Cadillac, they aren’t even in the ballgame. Their SUVs are warmed-over domestic trucks, and they’re enormous.”
Lexus was the top luxury brand in the U.S. in 2001 for the second consecutive year, and with both its cars and trucks, wins high marks for thoughtful, on-the-mark products.
“They’ve figured out what U.S. consumers want,” said David Bradley, auto industry analyst with J.P. Morgan in New York. “If there’s one thing you have to give them credit for, it’s market research.”
Sweden’s safe-and-sane car maker, Volvo, has taken some by surprise and entered the truck wars with its first SUV, the XC90. It will be positioned as a full-size luxury sport-utility to compete with the likes of Acura’s MDX, the Lexus RX300 and the six-cylinder versions of the Mercedes-Benz ML and BMW X5.
Volvo’s decision to build an SUV was driven by necessity. No car company that wants to increase its U.S. sales appreciably can be without one these days, said XC90 project director Hans Wikman.
Thus Hyundai recently entered the fray, and Volkswagen and even Porsche are planning SUVs, and Saab is developing a “crossover” vehicle with SUV-like characteristics.
“We expect 70% of our buyers to be conquests from other brands,” said Peter Horbury, Volvo’s chief designer who headed the XC90 design team.
The rest will be Volvo customers who have been waiting for an SUV or who left the brand for a competitor in order to get an SUV but would come back to Volvo if it had one, Volvo executives say.
“We have the [manufacturing] capacity to expand to 200,000 cars a year in the U.S. and 600,000 worldwide, but we cannot do that without a car like this,” Wikman said of the new SUV during a recent interview at Volvo’s North American headquarters in Irvine. Volvo sold 125,673 of its cars and station wagons in the U.S. last year.
Though Volvo initially expects to sell 50,000 XC90s worldwide, almost 35,000 will be allocated for the U.S.
General Motors entered the so-called brute-ute wars last week with the unveiling at the L.A. show of the production model H2 sport-utility, baby brother to the gigantic Hummer SUV adapted from the military’s Humvee personnel carrier and popularized by actor Arnold Schwarzenegger.
The 2003 Hummer H2, shorter and narrower than its big brother but still one of the largest SUVs on the market, is expected to go head-to-head with the Mercedes-Benz G-Class, or Galaendenwagen, another boxy behemoth originally sold as a military vehicle.
A Hummer SUT, or sport-utility truck built on the H2 chassis but with an open bed in back, is scheduled to follow in 2005.
The British SUV brand Land Rover, which like Volvo is owned by Ford, is trying to overcome an image of quality problems with the completely redesigned $70,000, 282-hp Range Rover.
Honda has high hopes for its Pilot, the scaled-down version of the Acura MDX which has won rave reviews.
The Pilot seats eight passengers and will share the MDX’s 3.5-liter V6 engine but sell for a much more accessible price, between $25,000 and $30,000.
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Jones reported from Detroit and O’Dell from Los Angeles.
