GM’s Return to Medium-Duty Creates Three-Way Sales Race

April 05, 2018 by Ryan ZumMallen, @Zoomy575M

The return of General Motors to the medium-duty segment has brought excitement to the normally unglamorous world of hard-working trucks.

The vehicles competing in Class 4 and 5 share familiar styling with pickup trucks while providing the muscle necessary for jobs from construction work to utility servicing. Class 4 trucks have a gross vehicle weight rating up to 16,000 pounds, and Class 5 is up to 19,500 pounds.

And now sales are up for grabs. GM’s 2019 Chevrolet Silverado 4500-5500HD enters the marketplace looking to steal business away from current leaders Ford and the Ram division of Fiat Chrysler Automobiles.

“We’ve got to conquest largely from Ford and a little bit from Ram in order to be successful,” said Ed Peper, vice president of GM Fleet and Commercial Operations in the U.S., at the Work Truck Show in Indianapolis.

“There’s only so much market here,” Peper said.

And there are other competitors ready to jump in. GM’s truck is designed in partnership with Navistar International Corp., which will build the chassis and assemble the vehicles at its factory in Springfield, Ohio. The trucks go into production later this year. Navistar will sell its version through its International Truck brand dealerships.

Sales in Class 4 and 5 rose from 90,300 trucks in 2016 to 101,600 in 2017, an increase of 12.5 percent, according to ACT Research Co.

But the market is fairly mature, said Steve Tam, an analyst with ACT. That means that any Chevrolet sales will likely take business away from Ford, the leader in the segment, and Ram.

Ford F-450 Super Duty chassis cab

2017 Ford F-450 Super Duty chassis cab. (Photo: Ford)

A slew of other competitors in the segment offer “cab-forward” rather than pickup-style trucks, including Freightliner, Hino, Isuzu, Mitsubishi Fuso, Kenworth and Peterbilt. But the real fight lies in pickup-style trucks.

GM’s challenge is to fight off Ford and persuade customers to return after leaving them “high and dry” when it exited the segment in 2009, Tam said. It will have to rely on its large distribution service and support network to get up to speed.

The automaker’s biggest advantage is that “there have been a lot of customers waiting on the sideline,” Tam said. “I think they’ll do well in this space.”

Not Going Quietly

Ford and Ram will do everything they can to cling to their market share. Respectively, the two automakers held 54 percent and 17 percent of Class 4-5 sales in 2017, according to ACT.

Isuzu, with a cab-forward truck, also captured 17 percent of the market. But other factors are in play for Ford and Ram.

As major automakers in both the U.S. commercial and consumer markets, each sale of a Class 4-5 truck represents something more.

2017 Ford F-Series Super Duty chassis cab

2017 Ford F-550 Super Duty chassis cab. (Photo: Ford)

Due to fierce brand loyalty and simplicity when it comes to servicing, executives at each of the Detroit Three told that Class 4-5 customers often return to the same automaker to buy commercial vans, consumer pickup trucks and even passenger crossovers and small cars.

“Selling in Class 4-5 definitely helps us sell other products in the lineup,” said Dave Sowers, commercial marketing manager for Ram.

Many fleets have a wide range of trucks that vary in size and capability, Sowers said. They prefer to have their vehicles serviced or upfitted — modified — with one automaker or dealership. And if the company trusts an automaker to sell them a chassis cab medium-duty truck, it’s “relatively easy” to sell them on other vehicles, he said.

“There’s a lot in adjacency business here,” Peper said.

GM estimates that each commercial truck sale leads to two additional vehicle sales.

Taking Share

Ford believes its long standing and knowledge of the medium-duty market will enable the automaker to defend its dominant market position.

The company has received good reviews from fleets using its aluminum-bodied F-450 and F-550 trucks and is focused on getting ahead of problems before they happen in order to keep customers happy, said Kevin Koester, Ford’s medium-duty truck and F-Series Super Duty fleet brand manager. Commercial customers loathe unanticipated service sessions and repairs because of the hit to productivity when vehicles are out of operation.

“It’s a lot different from when you launch a vehicle and start from scratch and have to build up,” Koester said.

Drivers in the Class 4 and 5 segments are typically not professional drivers but rather technicians who drive the trucks in order to perform their real specialty, he said. That’s why Ford views customers on a fleet-by-fleet basis rather than as an entire segment, Koester said.

Such familiarity with the market is one reason that Ford will likely be able to weather GM’s intrusion, Tam said. It’s probably worse news for FCA, he said.

“We’ll see a re-jiggering of the market,” Tam said. “Just like when GM left.”

Ram will offer a factory-installed telematics system on all commercial trucks and vans, including the Ram 4500 and 5500, the company announced at the Work Truck Show. The move is an effort to give fleets better information about their vehicles in real-time. Ram is banking on the feature leading to new sales, Sowers said.

2018 Ram Chassis Cab - Commercial

2018 Ram 5500 chassis cab. (Photo: FCA)

“If you’re not using telematics to optimize your fleet, you’re behind the times,” he said.

Ford offers telematics features in its F-450 and F-550 trucks, and GM promised extensive telematics in its new Silverado 4500HD and 5500HD.

All three brands will soon offer medium-duty trucks with similar capability and technology, Tam said. Even if the market has only modest growth in its future, automakers see a bright future in Class 4-5.

“People need these trucks for the kind of work that needs to be done, and there isn’t any substitute,” Peper said.

Following the Silverado 4500-5500HD debut, the biggest challenge facing GM is that “we can’t get them out fast enough,” said John Schwegman, director of commercial product and medium duty for GM fleet.

“There’s a constant need there,” Schwegman said. “It’s not a cyclical market.”

Read Next: Top Picks from the 2018 Work Truck Show

3 Responses

  1. Animatd1

    I look forward to building these this fall, the Nav/GM collaboration. The 4×4 version will be a hit I think as long as they don’t price themselves out of the market.

  2. Pearce Truck and Auto LLC

    I’m very interested in these trucks, as this is the first truck in this size category that offers both air ride rear suspension and a clean frame to mount a wrecker body onto. With adding the four wheel drive, this truck could very easily become the go-to chassis in this market. There’s also all the up-fitter options that any body builder could need, thus making this truck easily adaptable to suit a wide range of needs.


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