Will new pickups pull their weight?
Ford Motor Co. and Chrysler, both struggling to find profitability in an increasingly challenging environment, introduced redesigned versions of their important full-size pickups at the North American International Auto Show on Sunday.
Ford Chief Executive Alan Mulally -- accompanied by country music star Toby Keith, NASCAR truck driver Rick Crawford and other celebrities -- lifted the curtain on the F-150, the top-selling vehicle in the country.
Minutes later, Chrysler CEO Robert Nardelli revealed the Dodge Ram on the street outside Detroit’s convention center -- with help from a herd of longhorn bulls.
Ford’s F series trucks sold 690,000 units last year, far above the Chevy Silverado line and over 200,000 more than the Toyota Camry; the Dodge Ram, meanwhile, sold about 360,000 units, putting it sixth overall and first in Chrysler’s lineup.
Both automakers have relied heavily on incentives to sell the trucks in recent years, about $4,000 for each Ford and more than $6,300 per Dodge Ram, according to Edmunds.com.
With traditional competitors like Chevrolet and upstarts like Toyota -- with the Tundra -- spending less than $3,000 in incentives last year, analysts wonder how hard it will be for Ford and Chrysler to sell these trucks in a national car market that’s expected to shrink by more than 500,000 units next year.
“We’re in a cyclical downturn where people like construction workers who use them just can’t buy as many trucks,” said David Healey, an analyst at Burnham Securities. “My guess is that the big-pickup market will drop more than the market as a whole because of that.”
Ford sales analyst George Pipas said the company expected total 2008 sales to be between 15.5 million and 16 million. In 2007, sales were 16.15 million, according to Autodata, down from 16.6 million in 2006.
Beyond downturns in the construction business, fuel economy could also be a challenge for full-size trucks. Ford says its new F-150 will be on average one mile per gallon more efficient than its predecessor, while Chrysler said its Ram will show a 5% increase in economy; that translates to slightly less than 1 mpg.
This could be a particularly important factor for the roughly one-third of full-size pickup customers who use the trucks for personal rather than professional reasons. Still, said Mike Accavitti, a spokesman for Dodge, “fuel economy is not the prime motivator for people who buy in this segment.” Instead, he said, they look to questions like towing capacity and horsepower.
They also look at price. Margins on these trucks are among the highest in the industry, but the huge incentives offered by Ford and Chrysler take a significant bite out of profits. Both automakers said they would continue offering incentives to keep these big trucks selling. “We take leadership very seriously,” said Mike Crowley, marketing manager for Ford Trucks.
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