Can Midsize Pickups Haul Themselves Back to Sales Respectability?By Michelle Krebs March 15, 2010
The auto sector's ongoing malaise has battered even the healthiest of automakers, models and market segments. But probably no segment has endured a deeper or more protracted decay than midsize pickup trucks.
It started long prior to the nation's late-2008 economic collapse: the midsize pickup segment has been slipping precipitously for more than a decade - and now the industry's sales collapse has brought the midsize pickup market to the brink.
If that sounds a little dramatic, know that combined sales of the segment's seven major players - Dodge Dakota, Ford Ranger, Chevrolet Colorado/GMC Canyon, Honda Ridgeline, Nissan Frontier and Toyota Motor Corp.'s Tacoma - were 763,553 in the year 2000. Last year, those same seven players combined for 265,513 sales. Two-thirds of the segment's volume blown away in a decade.
Decade Of Decline, Even Worse Recently
Data developed by Edmunds.com show the compact pickup market had been steadily dropping for a decade, but perhaps even worse, the fragmentation pattern of market share in the most recent years has led to just a couple of comparatively healthy players. The healthiest, Toyota's Tacoma, totally outstripped all competitors last year in being the only model to deliver six-figure sales, hitting 111,824. The next best performance came from Ford's Ranger, yet it managed barely half the Tacoma's sales.
And with Toyota's unintended acceleration and recall problems refusing to subside, it's hard to say what may happen to Tacoma sales this year (through February, Tacoma was undamaged, with sales up 1.3 percent).
Apart from the Tacoma and Ranger, the rest of the segment's major players hardly deserve the title "major:" two barely broke the 10,000-unit mark and General Motors Co.'s Chevrolet Colorado was the segment's third-best seller with a scanty 32,413 transactions. As recently as 2005, the Colorado sold four times its 2009 total.
Last year was a particularly punishing exclamation point on the midsize pickup segment's long haul to the bottom, said Edmunds.com pricing and industry analyst Ivan Drury.
"Compact trucks lost 31% of their sales from 2008 to 2009, while the industry overall only lost 21%," Drury said. "Without any of these models having any major changes scheduled for 2010, their sales outlook is bleak again this year."
Clearly, midsize (formerly known as "compact") pickups have fallen out of favor with buyers, and the reasons are manifest.
Why Buy Midsize?
First and foremost, Drury said, midsize pickups recently have been strangled by their own makers' hands: automakers with fullsize pickups in their lineups (of the seven makers in this analysis, only Honda does not have a fullsize pickup) have delivered incentives on the fullsizers typically twice as sweet as those offered for midsize pickups.
Using Edmunds.com's proprietary True Cost of Incentives (TCI) metric, Drury said that, taking last December as an example, TCI was $4,125 for full-size pickups. The midsize-pickup TCI in December was just $1,601.
"This is fairly typical for large truck incentives to be near double - or more - of midsize pickup TCI," said Drury.
Many also argue that as the size of midsize pickups ballooned, so did their amenties, equipment - and prices. Well-equipped midsizers easily creep into the price bandwidth of fullsizers, causing many buyers to opt for the larger and typically more capable fullsize counterpart. Throw in incentives that often exceed by thousands of dollars those offered for midsize pickups and it's easy to understand why buyers are tempted by the fullsize option.
Full-year 2009 sales for Chevrolet Colorado were down 40 percent and sales for the first two months of 2010 were off another 37.5 percent. For Ford's Ranger, 2009 sales were down a palatable 16 percent compared with 2008 and sales for the first two months of 2010 had improved by 22.4 percent, but 2010 sales have been pumped by fleet purchases.
Sales for Dodge's Dakota, meanwhile, plunged 59 percent in 2009 to an almost unbelievable 10,690 units for the entire year - in 2001, Dakota sales were almost 1,500 percent higher. And Dakota sales for the first two months of 2010 are off 33 percent from 2009's depths.
With segment sales in freefall for the better part of the last decade and with scant prospect for improvement, it's little wonder, then, the Detroit Three automakers, with their historic slant towards pickups and plants dedicated to their production, are scrambling to adjust to the collapse of midsize pickup sales.
GM has scheduled its Shreveport, LA, midsize pickup assembly plant for closure in 2012 (the plant also produces Hummer H3 models) and Ford still plans to end Ranger production at its Twin Cities, MN, plant in 2011. Chrysler's Warren, Mich., plant, site of Dakota assembly (as well as Dodge Ram) was shut down for an extended period when the company went through Chapter 11 bankruptcy restructuring early last summer - and later, traditional holiday shutdowns were extended to offset bloating inventories.
Probably the most important question for the segment: what's next? Can anything be done to resuscitate sales that have plunged by two-thirds over the last decade, or does that decline prove the midsize-pickup configuration simply is a relic that time and buyers are leaving behind?
After a few recent concept vehicles offered glimpses of what some automakers might have been thinking - a move to lighter-duty models derived from car-based unibody structures was one theme - most makers haven't bothered to acknowledge midsize pickups still exist.
The most notable recent play is Toyota's A-BAT concept, a compact pickup on a unibody platform with multi-configurable bed options. Although it looked chunky, it was a couple feet shorter than an extended-cab Tacoma. Little has been said about the A-BAT since its unveiling at the 2008 Detroit auto show, but recently (and pre-recall hysteria) Toyota's Scion youth unit has been making noise about a pickup to expand its still-narrow model range.
The other option: get back to basics - in terms of equipment and cost. Concentrate on a new generation that brings back the "compact" part of compact pickups. Once they're smaller, might as well return the focus back on utility, too - forget fancy upholstery, nav systems, V8 options.
If the necessary price chop dictates piggybacking on the unibody platforms on which most automakers' passenger cars almost universally rely, so be it.
But there's another possibility: third-world sourcing.
India's Mahindra & Mahindra is ready to throw a grenade in the room when it launches a U.S. version of its 2- and 4-door pickups based on the Scorpio hauler already sold in other world markets. The pickups will use a 2.2-liter 4-cylinder turbodiesel the company claims will deliver 30 miles per gallon on the highway.
The big play: the Mahindra pickups will offer plenty of work-truck chops and modern specification while being quite inexpensive.
A Mahindra spokesman told AutoObserver the pickup's U.S. sales launch - pushed back a time or two - now is slated for sometime in the second quarter. An SUV based on the same architecture is "still on the books within a year of the pickup launch," but the company some time ago shelved plans to build the pickups in the U.S.
However, "The market outlook for compact trucks doesn't look good, and Mahindra beginning sales this year without any distinguishing features - other than a diesel engine - doesn't bode well," said Edmunds.com's Drury.
The Volkswagen Group earned more than the usual attention this month with the launch of its new Amarok, a made-in-Argentina pickup that looks like VW's twist on the Ford Explorer Sport Trac. The Amarok has all the low-cost components that are hallmarks of almost all midsize pickups, including body-on-frame construction. The company told Edmunds.com's Inside Line that it isn't ruling out the Amarok's potential for U.S. sales.
Ford and GM also have suggested prospective replacements for their respective midsize pickups could be adapted from low-cost Latin American models. Given the tremendous pressures on the segment - not to mention its decimated volumes - most expect that if the companies take this route, production will not be in the U.S., regardless of attractive new wage rates available from the United Auto Workers union. - Bill Visnic, Senior Editor