GM's Next Battle With Ford: Really Big Pickups
May 16 2018 - 5:59AM
Dow Jones News
By Mike Colias
The business of big trucks is bigger than ever, opening up a new
front in the market-share battle between General Motors Co. and
Ford Motor Co., which dominate the production of these multitasking
pickups.
A strong economy and the December tax overhaul are helping lift
sales of commercial vehicles, mainly pickup trucks and delivery
vans used by general contractors, farmers and other skilled trades,
auto dealers say. While Ford has for years had a sizable lead in
the battle for business customers, with its F-Series pickup, GM
later this year plans to reintroduce a so-called medium-duty
commercial truck, a category the auto giant abandoned around the
time of its 2009 bankruptcy.
The beefy new Chevrolet Silverados will be built under an
agreement with truck maker Navistar International Corp. at a plant
in Springfield, Ohio. The trucks are as much as three times as
heavy as a regular Silverado, and users convert them into
everything from dump trucks to ambulances.
GM's return to the segment reflects Detroit's sharper focus on
trucks and sport-utility vehicles as demand for passenger cars
recedes. GM, Ford and Fiat Chrysler Automobiles NV are adding new
truck models in a bid to boost profits. Big pickup trucks and the
SUVs that share the same frames generate both the majority of
global profit at the companies and offer fatter profit margins than
cars, analysts estimate.
Ed Peper, head of GM's fleet business, believes the return of
the medium-duty Silverado truck to GM's lineup will bring back
business customers who defected to Ford. "We've been losing
customers because we don't have this," Mr. Peper said.
John Ruppert, general manager of Ford's commercial sales, is
confident Ford can protect its medium-duty business because it has
strong relationships with business customers and the companies that
convert the trucks for specific use.
Ford and GM are going after customers like Fred Hollmann, owner
of a landscaping company near Cincinnati. Mr. Hollmann said he
plans to buy several pickup trucks through next year to update his
fleet of about 50 vehicles. Business is strong, and his lower taxes
have improved cash flow, he said, while provisions in the tax law
allow business owners to fully write down the depreciation of a
heavy truck the same year it was purchased, an incentive Mr.
Hollmann said he plans to utilize.
"We've got several trucks that have just gone by the wayside and
need to be replaced," Mr. Hollmann said.
The medium-duty truck segment is relatively small -- there were
about 150,000 sold last year, according to Columbus, Ind.-based ACT
Research Co. But buyers tend to be big spenders and typically
purchase many types of vehicles from the same auto maker, said
Steve Tam, an ACT vice president. Medium-duty trucks, which are
more customizable than other types of trucks, can go for more than
$60,000, plus hefty conversion costs.
Ford is the segment's major player, with about 45% market share,
according to ACT. But GM will face other competitors too, including
Fiat Chrysler's Ram division, Daimler AG's Freightliner brand and
Isuzu Motors Ltd., which have been adding features to make the
trucks more capable and easier to use.
Ring's End, a Connecticut lumber supplier for high-end homes,
switched to Ford for medium-duty trucks when GM left the market,
said Scott Herling, a sales manager. The company "is excited to
have another option, " he said.
GM's overall commercial business suffered after bankruptcy,
which scared away some customers. GM's sales to business customers
plummeted to about 165,000 vehicles in 2012, down by nearly half
from 2006.
The medium-duty Silverados will be the biggest vehicles GM
sells, though it will leverage other parts of its truck business.
For example, the cabin -- typically no frills -- will be similar to
the interior of a regular Silverado, with creature comforts like
Wi-Fi and Apple Car Play.
Keith McCluskey, a Cincinnati Chevrolet dealer, was a major
medium-duty truck seller before GM killed the line. He has already
fielded calls from customers eager to check out the new one, but he
believes winning back business from Ford will be tough.
"I don't think it'll be easy just to turn it back on," he
said.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
May 16, 2018 05:44 ET (09:44 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Mar 2024 to Apr 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Apr 2023 to Apr 2024