Pickup Truck Market Booms, But General Motors Falls Behind

July 10, 2019 by Jerry Hirsch, @Jerryhirsch

Americans keep snapping up pickup trucks but General Motors is struggling to keep up with the boom.

Consumers purchased nearly 1.5 million pickup trucks during the first half of this year, according to data compiled by Trucks.com. That’s about 17.5 percent of total auto sales of 8.4 million so far this year.

Typically GM is the top truck seller, thanks to its Chevrolet Silverado and GMC Sierra full-size pickups and the smaller Chevrolet Colorado and GMC Canyon siblings. But it’s fallen behind arch-rival Ford and is losing share to Ram, the Fiat Chrysler Automobiles truck brand.

FALLING SALES

Sales of GM’s recently redesigned Silverado are off 11.8 percent so far this year compared with the same period last year. Colorado sales have dipped 6.7 percent. GM had an 89 day inventory of trucks in June, the largest of the Detroit automakers, according to Adam Jonas, an analyst for Morgan Stanley. That compares to 81 days for Ford and 75 days for Ram.

GM blames its decline on the slow ramp up of its recently redesigned full-size pickup trucks.

The cadence of its half-ton truck launch, building crew cabs first and then regular- and double-cabs next, resulted in GM not reaching full production until late in the first quarter, said spokesman James Cain.

CREW CABS HOT

Sales of crew cab models, which had good availability, rose 12 percent in the second quarter, Cain said. But regular cabs and double cabs, which had limited availability, fell 56 percent and 30 percent compared with the same period a year earlier.

GM also was hamstrung by not starting to ship it’s heavy-duty pickup truck models until last month.

The company also is near its maximum assembly capacity. But it is making changes that will increase production of half-ton pickups by 20,000 trucks annually. And it will increase heavy-duty pickup truck manufacturing by 40,000 units annually.

GM will start to regain market share, Cain said.

“We are just getting started and we have a lot of runway ahead of us,” Cain said. “We have a formidable franchise and we are going to play offense.”

LOST MARKET SHARE

But the automaker has a lot of ground to make up.

GM sold 438,206 trucks during the first six months of this year. That’s 29.8 percent of the pickup market.  During the same period a year ago, GM had a much larger slice. It sold 478,671 trucks for a 33.8 percent share of the segment.

Helped by its new Ford Ranger midsize pickup, Ford sold 478,699 trucks during the first half of the year. That put it at the top with 32.5 percent of the pickup market. Ford is up from 31.9 percent in the same period a year ago, when it only sold F-Series pickups.

GM also is having trouble in the most lucrative full-size pickup truck market. Its “share in the large pickup segment has fallen to historically low levels” according to Barclays analyst Brian Johnson.

Johnson expects GM to will get some share back, perhaps by offering price concessions.

RAM JUMPS AHEAD

For now, the automaker’s flagship Silverado is behind Ram’s 1500 by a wide margin. Chevy sold 256,777 Silverados during the first half of the year. Ram sold 299,480. Ram is positioned to replace the Silverado as the second best-selling full-size pickup truck in the U.S. Ford’s F-Series has been the top seller for decades.

The “Ram with its Tesla-like large infotainment screen appears to be gaining retail share, while the outgoing legacy Ram model continues to push the fleet and low-end of the market,” Johnson wrote in a recent report to investors. “And Ford is holding up much better than expected overall.”

Ford plans to introduce a redesigned F-150 sometime next year.

Ram has launched a three truck strategy. About 25 percent of its sales are the so-called classic Ram 1500 model. It is the older version of the truck that Ram continues to sell. The automaker also has its redesigned Ram 1500 and new heavy-duty pickup truck models.

The Ram classic comes with deep discounts. The average transaction price is $31,433, according to J.D. Power data provided by GM. That’s about $1,000 less than the Chevy Colorado and $2,500 less than the GMC Canyon, much smaller trucks.

Ram says its strategy is paying off.

Sales have “been on a tear since we made the strategic decision to enter the year with a three-truck strategy,” said Reid Bigland, the company’s sales chief. “This is now the third month Ram pickup sales have surpassed 60,000 since December.”

GM MISSTEPS

Ram also is exploiting GM’s missteps, analysts said.

GM didn’t win any styling points with its new full-size truck models, said Sam Abuelsamid, an analyst for Navigant Research.

“A lot of people just don’t like the way it looks and I’ve heard almost no one say they love it,” Abuelsamid said. “The Ram on the other hand look fantastic and certainly looks much more premium. The interior of the GM trucks is simply not up to par with the Ram.”

“We would like to have seen more aggressive styling and risk-taking on the new product by GM,” Johnson said.

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