Pickups See Refinement, Competition

April 21, 2017

Pickup trucks remain a hot commodity and builders are struggling to meet demand. They are refining recently introduced models, and meanwhile promoting healthy cash concessions and low- or no-interest-rate loans made necessary by intense competition, especially among Ford, General Motors and FiatChrysler—the Big Three, which have the bulk of sales. All this benefits buyers—not just in purchasing but also in quality-built, feature-rich products and backing of them—and manufacturers still make money, especially on high-end pickups with fat profit margins.

Nissan, meanwhile, is coming up from the rear, not nearly close enough to make this a Big Four race, but nonetheless serious about pickups and business customers. Like its larger competitors, Nissan had a big presence at the National Truck Equipment Association’s annual Work Truck Show in Indianapolis in mid-March. The show is a reliable indicator of business activity and once again was a big one. Absent was Toyota, which backed away from commercial customers several years ago because it had all the sales it could handle from retail buyers.

The Trump effect

A generally strong economy may improve under the new pro-business Trump administration, and the stock market has soared since his election. The president promises high spending on infrastructure—a direct boost to construction companies and workers—even if he hasn’t come up with a credible plan to raise the $1 trillion he wants to spend. Gasoline and diesel prices remain low, making now a reasonable time to raise motor fuel taxes, but as always, Republicans won’t hear of it. Whatever road, bridge, water, sewer, and other infrastructure work materializes, pickups are among the many tools and pieces of equipment that will be bought to accomplish it. And in general, sales of all kinds of trucks follow the economy.

Trump’s anti-regulatory stance might also mitigate the Environmental Protection Agency’s legal flap thrown in the face of FiatChrysler over its alleged cheating on testing of EcoDiesel exhaust emissions. California’s Air Resources Board also filed a complaint. These have suspended sales of diesel-powered Ram 1500 trucks, and “we’re hoping for an early resolution” of the case, says Dave Sowers, head of Ram commercial marketing. Will Trump, perhaps through another presidential decree, force EPA to give up on this one? Would CARB also back off? That would allow Ram to resurrect its claim of offering the only half-ton full-size pickup with a diesel. That claim would be short-lived because Ford says it’s bringing out its own 3-liter diesel for the best-selling F-150, sometime during the 2018 model year.

But Trump has also decried the loss of American manufacturing jobs and proclaimed protectionism as the cure. The vilest villains, from what he says, are Mexico and China. For trucks, Mexico is of closest concern because various American-brand pickups, and many other cars and trucks, are assembled down there and brought up here for sale. It’s done under the North American Free Trade agreement, which Trump promises to renegotiate with America First fervor (though he hasn’t said what this might do to Canada, the third signatory to NAFTA and which also sells vehicles and other goods in the U.S.).

Trump is likewise determined to “build the wall” along the Mexican border—a long-term multibillion-dollar construction project that would benefit some American companies and workers, to be sure, and make illegal border-hopping more difficult. Whether Congress will appropriate the money is a big question, and Mexico says it will refuse pay for it. One alternative is a tariff on Mexican goods, but that would mean that American consumers, not the Mexican government, would foot the bill. So far no one in politics or the general media has made the connection between good manufacturing jobs in Mexico and diminished immigration of Mexicans (the numbers of legal and illegal entries to the United States have actually declined in recent years, studies have found). If good jobs stay there, is the wall really necessary, or would better enforcement do?

Several American-brand pickup trucks are built in Mexico: FiatChrysler’s Ram Heavy Duty series—which includes 2500 and 3500 pickups and 3500, 4500, and 5500 cab-chassis models—plus large and small ProMaster vans; but Ram 1500s are made in Michigan. Some of General Motors’ crew-cab Chevrolet Silverado and GMC Sierra pickups are assembled in Mexico; but others, including Regular and Double Cab models and all its full-size vans, are made in several plants in the United Sstates.

Both builders say they’re waiting to see if tariffs will be imposed on Mexican-made trucks. Such companies today are deft veterans of global manufacturing and likely have contingency plans for production. They will say only that they are waiting to see what will happen regarding tariffs, which would raise the cost of importing trucks from Mexico. Supply disruptions are likely if production must be switched to American plants.

Hot selling

Back to happier topics: In 2015 and again in 2016, builders sold more than 17 million cars and trucks in North America and expect that to repeat this year. But while sedan sales are waning, SUVs and trucks are gaining popularity. Pickups are so hot that some plants are on three shifts to try to meet orders. “Pickups have definitely been strong,” says Dan Tigges, General Motors’ full-size truck product manager. “Our biggest problem is trying to keep up with demand, particularly for diesels.” GM offers diesel power in its Chevy and GMC 2500 and 3500 Heavy Duty pickups and in the Colorado/Canyon mid-size models.

Among popular full-size pickups, Ford’s F-150 is still the single best-selling vehicle of any kind in America, according to John Ruppert, general manager, commercial vehicle sales and marketing, at a press conference on the evening of the Work Truck Show’s opening. The F-150 got new aluminum bodies in 2015 and F-SuperDuty pickups went to aluminum in ’16. Weight savings from aluminum bodies enabled engineers to beef up the SuperDuties’ frames and suspensions to handle higher loads and tow heavier trailers. Continued product improvement, increased capabilities, and emphasis on dealer service and parts enabled Ford conventional-cab trucks to outsell all competitors for the 40th straight year, he said.

A new Commercial Vehicle Center program involving qualified Ford dealers is aimed at commercial customers, he said. It requires dealers to stock more vehicles, to train personnel at all levels, and for service departments to remain open longer hours. Surveys show that 80 percent of Ford’s commercial-truck customers are located within 30 minutes of a Commercial Vehicle Center dealer.

XL Hybrids shows system for Ford's F-150

For model-year 2018, the F-150 will get relatively minor updates, including refreshed styling, adaptive cruise control with a “stop and go” function, and a new 3-liter diesel with a 10-speed automatic transmission, said John Scholtes, chief program engineer for commercial vehicles. Ford engineers are developing a gasoline-electric hybrid powertrain for the F-150, to be available in 2020. He noted the presence at the Work Truck Show of an F-150 fitted with an XL Hybrids electric driveline. It is part of Ford’s expanding Advanced Fuel QVM program, and those vehicles retain their original powertrain warranties.

Safety sells

The new SuperDuties “have been well-received,” said Kevin Koester, a Ford fleet brand manager, and “feedback we’re getting is that people like safety features” such as cameras, perimeter and cross-traffic alarms, and other aids to accident avoidance. “For the last few years, anything safety-related is a big positive. Fleets want it down to the base models,” which for Ford is the XL. Fleets tend to buy two-door Regular-cab XLs and XLTs, and sometimes the four-door SuperCab which offers tool and equipment storage space in the rear seat area. Longer four-door SuperCrews go to a sizable majority of buyers. For personal and mixed use, customers choose upscale trim levels and want electronic connectivity, though some people do not, he reports. All Ford pickups come with Bluetooth capability.

Diesels are popular in spite of low fuel prices that make a diesel’s hefty up-front charge harder to justify. At GM, diesel customers now tend to be individuals who pull horse and house trailers—a good application for a diesel that offers good fuel economy under heavy loading, says Dan Tigges. And GM’s Duramax V-8 diesel and Allison automatic transmission have amassed excellent reputations. But commercial buyers these days tend to look at the purchasing price and take less costly gasoline engines. In cab styles, two-thirds of retail buyers choose crew cabs and half of commercial customers do.

Notwithstanding Ford’s success with aluminum bodies, for now GM is sticking with steel. “We’ll continue to use the right materials for the right places,” is how Tigges puts it. Referring to GM’s TV commercials that show its steel beds standing up better to a cascade of paving blocks and a dropped toolbox than Ford’s aluminum beds, he quips, “You won’t be poking holes in our boxes.” However, he hints that GM is looking at other materials. A composite pickup bed, perhaps? Tigges won’t say.

Nissan still trails the Big Three in sales, but is now running faster with expanded van and pickup lines. Sales have expanded for the past seven consecutive months and continue to grow, says Tiago Castro, director of commercial sales and marketing. Nissan trucks built in Canton, Miss., have such good quality that they come with a five-year, 100,000-mile, bumper-to-bumper warranty that covers everything. “If a light bulb blows at 99,000 miles, Nissan pays for it,” he says.

XD (for eXtra Duty) pickups, which in capacity fall between half-ton and competitors’ three-quarter-ton models, now include both gasoline and diesel. The gasser is an advanced Endurance 5.6-liter V-8 that is standard in the revised half-ton Titan that came out last summer. The gas-powered XD is priced about $10,000 less than the diesel, but delivers 30 percent less fuel economy. That’s not a problem unless gasoline prices climb seriously. Nissan is the only user of Cummins’ V5.0 diesel V-8 (an updated version of the ISV5.0), and it’s “super-capable,” Castro says. An XD diesel will tow up to 12,500 pounds—considerably more than a half-ton pickup but without the higher weight, heft, and cost of a competitor’s three-quarter-ton diesel-powered pickup.

By the way, Cummins was actually developing the 5-liter diesel for Ram 1500 pickups, whose heavier siblings use the 6.7-liter Cummins Turbo Diesel inline 6. The smaller Cummins V-8 would have been a nice complement. But the program ended when Chrysler filed for Chapter 11 protection in 2009, says Mario Sanchez, a Cummins engineer who says he was involved in that effort (he’s now a marketing manager). When Chrysler soon emerged from bankruptcy, it had been merged into Fiat, which had its own solution for a light-truck diesel, the 3-liter EcoDiesel V-6 from a regular supplier, VM Motori. Nissan signed up for the Cummins engine when it thus became available.

Small-truck revival

The Colorado/Canyon “is a hit,” says GM’s Tigges. “We can’t keep up with sales. It brought that whole segment back.” Several years ago, the segment was shrinking and GM dropped its S10/S15, Dodge scratched its Dakota, and Ford withdrew its Ranger (while continuing to sell an updated model overseas). The smaller trucks were getting long in the tooth, and buyers were switching to full-size models because they did more and didn’t cost much more. Now customers are rediscovering the nimbleness and better fuel economy of midsize and compact pickups. Along with Colorado/Canyon popularity, sales of Nissan’s Frontier and Toyota’s Tacoma compacts have also risen, Tigges says, and Ford announced it is bringing back its Ranger in 2019.

But Ram is standing pat on its current full-size offerings. “A small truck needs four pillars” for success, says spokesman Nick Cappa. “Size, price, fuel economy, and capability. At least one of those is missing” with competitors’ offerings—usually capability, because many pickup owners want to be able to haul and tow trailers. Ram’s 1500 has a wide, roomy cab, good payload and towing capacity, and V-6 engines deliver mile-per-gallon numbers well into the 20s. Prices start in the mid $20,000 range—not much higher than a compact and on a par with GM’s midsize models, he says.

However, Ram’s Sowers acknowledges that “the (small pickup) segment is growing again.” Although a Dakota return is unlikely, Fiat, Chrysler’s parent, has light trucks that sell well in Europe and Asia. Would one of them be suitable for North America: a cab-chassis version of a small van, for instance? They are simple trucks, but could be comfortably outfitted, as are the Euro-Asian-influenced ProMaster vans, which are good on gas and able haulers. Euro-style vans have caught on big-time here. Maybe foreign-born pickups could also constitute a trend.