Midsize Growth

Critics Warn Midsize Pickup Growth Not Sustainable

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Clearly the all-new 2015 Chevrolet Colorado and GMC Canyon have injected some adrenaline into the midsize pickup truck segment and, so far, have provided all the segment players with growing sales, but for how long and at what cost?

According to Automotive News, as many as 16 percent Colorado or Canyon buyers switched from their full-size counterparts (the Silverado or Sierra 1500). Some experts think this potentially means that Colorado and Canyon sales eventually could take a big bite out of GM's half-ton pickup profits as well as flatten sales.

Some analysts believe the next few years will be good for midsize pickups due in large part the two new players and a revitalized Toyota Tacoma coming out by the end of this year, but over the next five years things could be different. Even if the midsize truck segment grows, some are saying it won't get bigger than 500,000 units, meaning less than 3 percent of the entire automotive industry — not even close to the segment's heyday in the late 1980s at around 9 percent.

The biggest unknown question with the new downsized GM twins is how badly they'll steal sales from their profitable full-size big brothers; however, for now Chevy and GMC sales of midsize and full-size pickups are growing steadily. Toyota benefits from this revitalization because the midsize Tacoma and full-size Tundra are built in the same San Antonio plant, so production can be shifted one way or the other quickly and efficiently. The Colorado and Canyon are built in a dedicated plant running three shifts.

Meanwhile companies like Hyundai and Ram are playing with the idea of stepping into the smaller pickup category, and Honda will be coming to market with an all-new Ridgeline next year.

PickupTrucks.com

This is an opinion piece, built on nothing but speculation and wrong information.

The GM twins are built and share the same Wentzville, Mo production facility as the G-Series vans, not a dedicated plant.

Productivity at Wentzville with the combo of Colorado, Canyon, and the G-Series in three shifts, and is far greater than the Toyota San Antonio facility.

Toyota SA (TMMTX) operates two shifts producing the Tundra and Tacoma.  Instead of adding another shift at TMMTX, Toyota added a third shift this month in Tijuana (TMMBC) where US Tacoma units are also produced providing around 13k more Tacoma units for US sale.  Q3 last year they added 6k Tacoma units at TMMBC.

Toyota seems to be adding volume and more volume, no speculation mention.  Even if, if the entire market doesn't grow that much, GM can still take share from Toyota, Nissan.   No speculation mention of the Tacoma sales cannibalizing Tundra sales.   It's implied its only a GM potential issue.  

GM is on track to sell 100 to 130k units this year. Out of a potential 500k market opportunity, that's only 20% of the market give or take.

I have a feeling the article has merit. If there truly is pent up demand, it will be satisfied soon. Then what happens. Previous mid twin sales went from 144,000 in 2004 to 32,000 in 2010. After a jump to 163,000 in 05 they lost sales every year until a mild increase in 2011 and 2012. This was during higher fuel prices to boot. What has changed to make them a better seller now? Sure, looks like a better product, but so are almost all other vehicles. I've heard sales are brisk, but looks like around 10k per month. That's not even on par with the previous version. Time will tell.

Its a far better product than any midsize that came before.
It get far better mileage than any midsize that came before.
Markets change and are changing. Remember trying to buy a crew cab just 10 to 12 years ago...now they far outsell anything out there.

There were no midsizes in the 80's, just compact trucks and full sizes ones. The compacts grew to midsize, gas mileage went down, sometimes worse than a full size. People quit buying them.

Offer a good product that people have been wanting, it will sell. Offer the same old crap, it won't. --Something Nissan refuses to learn.

The compact segment never went totally away.
The manufacturers just abandoned it with subpar and dated products.

I was never a big fan of the mid-sized Dakota platform back then but then the GMT400 wasn't as bloated as it is now. We had S10s and GMT400s at the same time and I never wanted for a mid-size.

critics warn that critics talk out their ass all the time and just try to mess things up with useless speculative banther

Truth wrote:

I have a feeling the article has merit.

Interesting how this article has merit when it can't even site the facts correctly (The shared Wentzville, goes googley eyes over the Toyota SA plant, yet don't mention the Tacoma Tijuana plant).  All that the article is all giddy and positive benefits of the Tacoma flexibility at SA is the same relative situation at Wentzville for the GM trucks.  The major difference is Wentzville is on working three shifts.

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Previous mid twin sales went from 144,000 in 2004 to 32,000 in 2010. After a jump to 163,000 in 05 they lost sales every year until a mild increase in 2011 and 2012. This was during higher fuel prices to boot. What has changed to make them a better seller now? Sure, looks like a better product, but so are almost all other vehicles. I've heard sales are brisk, but looks like around 10k per month. That's not even on par with the previous version. Time will tell.

Looking at volume in a vacuum, doesn't tell the story.  GM today is a vastly different company with a completely new balance sheet.  Gone is the mandatory move all the metal possible to break even or eek a profit.  Completely different story now.

The midsize product today when comparing transaction prices to the previous generation is $7k to 10k more per unit.  There's not much apparent cost cutting on the new truck versus the previous.   Turning the same volume as the previous generation, now is not a necessity to be profitable.  The 2.8 diesel launches late next year.  Still more product coming.  Hope the ZR2 becomes a reality.  The concept was as close to a production concept as they come.

Dealers still haven't hit inventory levels with the GM trucks.  Last month it was the fastest sales turning trucks in the industry.

How is GM a vastly different company? They are doing some of the same things that got them in trouble before. Also, if demand means they are selling as fast as they hit the lots, and they're selling less than 10k units per month, doesn't that mean they are only producing that many at the plant running 3 shifts? Is the plant that small? Got a link on the 7-10k more profit per unit? Not sure about that diesel either. Keep hearing about all the ecodiesel trucks FCA are selling but have not seen one yet. What about profit margin? Didn't someone say GM trucks have $8k or more on the hoods?

Truth wrote:

How is GM a vastly different company?

Compare any pre bankrupcy GM product to the current.  ATP's are up substanially.  

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They are doing some of the same things that got them in trouble before.

Like?

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Also, if demand means they are selling as fast as they hit the lots, and they're selling less than 10k units per month, doesn't that mean they are only producing that many at the plant running 3 shifts?

Dealers have restrained inventories.  Can't sell what's not on the lot.  It takes several months to fill inventory starting from 0.  Then it's more difficult when the product that arrives turning in in 7 to 14 days.  It's not dutiful to fathom unless someone comes into a conversation that's different from ones perception of the actuality.

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Is the plant that small?

It's 4.2 million square foot facility.

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Got a link on the 7-10k more profit per unit?

I don't have it handed, read it a while back from Automotive News I believe.  The figure was media produced defining the Average Transaction Price per unit (ATP) increase over the previous models.  A 2012 2LT 4x4 Crewcab Colorado MSRP'd for $30,320.   A '15 Colorado Z71 4x4 Crewcab MSRP's for $34,990.

As GM Authority states, any options tip the scale past $40k easy.  

GM Authority wrote:

Additionally, choosing the crew cab configuration puts the price range of the 2015 Colorado and 2015 Canyon well into the $30,000+ range, well beyond the base MSRPs, with just a few options such as the GearOn cargo management system and a bedliner. Sticker shock may push some buyers to stay with the base extended cab or skip right to the full-size segment. But considering the early ATP of the 2015 Canyon is closer to $40,000 than $30,000.

GM Marketing manager and MotorTrend wrote:

GMC’s Canyon Marketing Manager Kenn Bakowski recently told Motor Trend,that the current top model is the SLT crew cab with a 3.6L V6, standard 61.7-inch bed and four-wheel drive out of the gate. This model starts at $38,125 without options and is at the top of the Canyon’s price range of $21,880 to $38,425. Another interesting piece of data is the take rate on key options. Currently, the Navigation upgrade ($495) is trending at 40 percent of all orders and the Driver Alert Package ($395) is 30-35 percent.  Both of these packages are performing better than anticipated.

Big ticket options and high percentage take rates, big ATP's.

GM April Press Release wrote:

GM’s estimated share of the retail market for midsize pickups is now 31 percent calendar year to date, according to J.D. Power PIN.

Colorado midsize pickup had its best month since launch, with 7,010 deliveries. The Colorado has now been the industry’s fastest-selling truck for three months in a row, with a “days to turn” of only 15 days.

The Sierra and Canyon have the highest average transaction prices (ATPs) in their respective segments, according to PIN.

ATPs were approximately $34,750, up $880 per unit, according to PIN estimates. Calendar year to date, ATPs are up $1,580.

Incentive spending as a percentage of ATPs was 9.5 percent in April, according to PIN estimates. That is in line with March and down 0.6 percentage points year over year. Industry average spending was 9.2 percent of ATP.

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Not sure about that diesel either.

What's uncertain about the 2.8 Duramax?

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Keep hearing about all the ecodiesel trucks FCA are selling but have not seen one yet.

That's hardly scientific.  You sure you haven't seen one?   I was doing 70 mph west bound, he was 70 mph east bound.  He passed me.  I just didn't see it. :/  Guess all the owners on all-par are pulling everyone's leg stating they own an Ecodiesel.

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What about profit margin? Didn't someone say GM trucks have $8k or more on the hoods?

Not the Colorado and Canyon.

I've personally seen a ton of EcoDiesels on the roads in this neck of the woods. But then, the difference in gas and diesel prices up here are a lot closer than state-side. In some areas close by, diesel is even cheaper.


Regular gas = $4.33/US gal
Diesel = $4.21/US gal

Round these parts diesel is currently hovering 10 to 20 cents higher than 87 octane gas. Why has diesel lessened the price differential so substantially?  Demand?  Current  retailer announcements have 6000 planed brick and mortar store closures throughout the US and Canada.

From what I've seen it is hard to tell if a Ram has an EcoD driving by on the road.
Similar to the Chevy Cruze Diesel, just a small badge indicating it's a Diesel. The Ram EcoD even has dual exhaust, IIRC.

You pretty much have to be looking for it on the front fender, but it does stand out.