Midsize pickups: end of the line or on the cusp of a revival?
Ten years ago Ford dealers delivered over 275,000 Rangers. This year, Ford is tracking to deliver about 62,000. What happened? Several things.
First, obviously, the entire new vehicle industry has plummeted from the halcyon days pre-2008. Second, Americans' affection for smaller pickups has faded. Just five years ago almost 4% of all U.S. new vehicle registrations were midsize pickups. Now that number has retreated to just 2.3% (July 2011 CYTD). For slightly more money, the consumer can purchase a full-size pickup offering far greater utility in terms of towing capacity, bed size, horsepower and more. Further, some of the smaller trucks have languished on the market without timely refreshing, including the once segment-leading Ranger (a reason for this "neglect" is that the underlying platform has become obsolete as it is no longer used for the Ford Explorer). As the segment faded, some automakers dropped out altogether, including Mazda, Mitsubishi and one Ford (Explorer Sport Trac). Now, with the segment in such decline, it is difficult for the automakers to financially justify investing in new products.
However, there may be some light on the horizon. The recently announced labor agreement between GM and the UAW includes re-opening at least one mothballed GM assembly plant, and there are rumors that a re-designed Chevrolet Colorado (already slated for other global markets) may be assembled there and sold in the U.S. Further, the two major Asian players, Toyota and Nissan, are hanging in there, partially because of timely re-freshening. Their two midsize pickups together account for over 54% of all midsize pickup registrations so far this year. The Tacoma has been the segment sales leader with a segment share above a third for four years in a row, and the Frontier's share is up for the second straight year.
If GM decides to continue competing in this segment, coupled with the success of the two major Asian companies, it is hard to envision Ford sitting on the sidelines and ceding all that volume to its competitors. Also, with CAFÉ standards looming, including the 2025 benchmark of 54.5 miles per gallon, the automakers will need to build every possible smaller vehicle to be able to keep selling the larger, more profitable ones. The midsize pickup segment may not be done yet.
Posted by Tom Libby, PolkInsight Advisor, Polk (09.26.2011)
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