Pickup Truck Market Shows the Economics of Change

By Tom Berg, Truck Editor | April 30, 2014

A mix of trends are affecting the business of designing, building, selling and operating pickup trucks. And as with business in general, they’re all driven by economics. Trends include more popularity for gasoline and alternative-fuel engines, but the most important thing everyone sees is a strong upturn in sales as the economy continues its recovery. Prosperity is back.

“There’s a lot of old iron coming in,” says Dan Tigges, product manager for full-size trucks at General Motors. Fleet managers are finally trading vehicles they’ve been making do with through the Great Recession, which had chilled commerce and all but killed large-scale construction activity. With activity picking up, construction companies and contractors are on buying binges. Year-to-year sales have been up by varying amounts among the five builders active in pickups in North America: Chrysler’s Ram brand is up 23 percent;  and Ford, GM, Nissan and Toyota are each up by 10 to 12 percent compared to this time last year.

Those are sales of all pickup types: compact and midsize, half-ton, 3/4-ton, and 1-ton, in weight Classes 1 through 4. All types are used in commercial activity.

“It’s incredible, the influence of pickups on the commercial market,” says Todd Kaufman, Ford’s F-Series chassis-cab manager. Many pickups tend to be dual-use, doubling as implements on the job and transportation in the off-hours. If the truck hauls hand tools, equipment or materials to a job site; is driven home at night; then tows a boat or camper trailer on weekends, it is a dual-use vehicle. Some 42 percent of F-150s are used that way, Kaufman says, adding that the F-150 has been No. 1 in pickup sales for the last 29 years and Ford’s SuperDuty pickups and cab-chassis models currently claim 47 percent of all such sales.

Ram is striving to catch up, and its 1500 and Heavy Duty versions have garnered awards in recent years. These, as well as the trucks’ attributes, have converted to sales, says Bob Hegbloom, Ram brand’s director. He says Ram’s sales increases over past year are more than twice those of competitors, and he says commercial sales alone are up 21 percent. He singles out the Tradesman version of the Ram 1500 as an example of commercial appeal. It came out in 2011 as a Regular Cab, “and that tripled our share (of that type of pickup) for 2012.” Work-oriented Tradesman trim is now available on additional cab styles.

GM’s commercial activity is also up, said Tigges, and 12 to 15 percent of sales of GM’s light-duty pickups go to fleets. The builder has not done as well as it hoped with its new-for-2014 Chevrolet Silverado/GMC Sierra 1500, especially against Ford’s F-150, though some observers note that Ford has been heavily discounting prices to boost its own sales. In any case, GM has transferred many of its interior amenities from the 1500 to the 2500 and 3500 HD series. Gasoline engines have all been enhanced with variable valve timing, cylinder deactivation (which GM calls “active fuel management”), and direct fuel injection. The 4.8-liter V-8 is gone, replaced by a much-modernized 4.3 V-6 that makes as much power and torque but with better fuel economy. The Duramax diesel V-8 remains an option over large gasoline V-8s in the HD series.

Although Ford has retired its compact Ranger and Ram butted out its midsize Dakota, GM has completely redesigned its Chevy Colorado/GMC Canyon small trucks. Due out this fall, the new pickups are more roomy, comfortable and capable than current models, according to Mike Jones, their product manager.

“We had a real pull from the market,” he says. “They (customers) really liked it. If you don’t need towing but still need the versatility of a pickup, and want maneuverability and fuel economy, why not?”

The new Colorado/Canyon should do well as a commercial truck, Jones says. Quiet cabs and a big, roomy console can make the Colorado/Canyon into a rolling office. A bed-delete option will be available so specialized bodies can be mounted without having to pay for and discard the pickup bed. “It’s really nice to be able to offer three trucks,” he says: the Heavy Duty, the 1500, and now the midsize. 

Toyota’s popular Tacoma compact and Tundra full-size pickups are selling so well that executives have backed away from commercial sales. Toyota did not exhibit at the recent National Truck Equipment Association’s Work Truck Show in Indianapolis, where it had a strong presence in previous years (and all its competitors had large booths this year). “We looked at our sales and found that 95 percent were going to consumers,” says Andrew Franceschini, national truck marketing manager. “Demand is so strong now that we have a hard time keeping up with the consumer sales.”

The Tundra was redesigned several times since its morphing from a 7/8-size pickup to the current model that’s every bit as big as Detroit-based competitors’ full-size trucks. And it claims more American content—about 75 percent—than any other U.S.-built pickup. So the Tundra remains a platform for many upfits by specialty manufacturers, and Toyota continues its relationship with two big upfitting companies.

Nissan’s Frontier, which has grown closer to midsize over the years from its compact origins, “is especially popular among commercial users,” said spokesman Phil Lienert. And indeed, construction workers in California and other markets where import brands have long been welcomed are nearly as likely to drive trucks such as the Frontier and Tacoma to job sites as full-size pickups. Nissan has volume-based pricing discounts on the Frontier and full-size Titan that some fleets take advantage of, and dealers are committed to servicing work trucks. The Titan continues largely unchanged since its introduction in 2005, with V-6 or V-8 gasoline power and automatic or manual transmissions.

Cummins ISV5.0

What people at Nissan North America are talking a lot about is the upcoming 2015 Titan, which is being extensively redesigned and readied for Cummins diesel power. The ISV5.0 V-8 is also being evaluated by makers of walk-in vans, specialty trucks and buses (and reportedly by Toyota for its 2016 Tundra), but Nissan will evidently be the first to actually use it.

“Truck owners told us there’s a demand for the performance and torque of a diesel in a capable truck that doesn’t require the jump up to a heavy-duty commercial pickup,” says Fred Diaz, divisional vice president. The Titan will continue to be standard with gasoline engines. 

Cummins’ 5-liter diesel promises high performance and low total cost of ownership. In the Titan, the diesel’s rating will be 300 horsepower and torque in the mid-500s. Cummins will also offer it in four ratings for commercial trucks: 200 and 220 horsepower with 520 lb.-ft., and 250 and 275 horsepower with 560 lb.-ft. Rated speed is 3,200 rpm.

At the Chicago Auto Show in January, Nissan and Cummins also showed a Frontier with a 2.8-liter, four-cylinder turbocharged diesel rated at 200 horsepower and 350 lb.-ft. Nissan said the diesel would be 35 percent better in fuel economy than the current gasoline V-6, but wouldn’t say if there are plans to offer the “concept” Cummins in the Frontier.

One might think that with its long-time use of the larger Cummins inline-6 diesel in its pickups, the Ram brand would’ve wanted the Cummins V-8 for the 1500 pickup, but no. “We looked at the 5-liter,” says Bob Hegbloom, “but it just didn’t deliver on fuel economy. We got marginal numbers.” Instead, Ram chose a smaller V-6 EcoDiesel from VM Motori, an Italian partner of Fiat, Chrysler’s corporate parent (and with whom Chrysler has since merged). The 3-liter V-6 is smaller, lighter and less costly, and it earned an EPA Highway rating of 28 mpg. It’s proving popular as an option in the Ram 1500, which was the first half-ton pickup with a diesel and remains the only one until the diesel Titan hits the market.

Chrysler nonetheless continues using the large I-6 Cummins Turbo Diesel in its 2500 and heavier Ram pickups and cab-chassis trucks. Model-year 1989 was its first year in the then-Dodge Ram 2500 and 3500. Now at 6.7 liters, it makes up to 385 horses and 850 lb.-ft. Ram is offering a 25th Anniversary trim kit for its 2014-model Ram HDs to mark the occasion. 

Ford’s 6.7-liter PowerStroke offers 440 horsepower and 860 lb.-ft., up from 400 and 800. This is the latest jump in the leapfrogging among Ford, Ram and GM in ratings boasts for their diesels. Ford’s diesel V-8 is offered in F-250 to F-450 SuperDuty pickups and the F-550 cab-chassis. And the PowerStroke will be used in redesigned F-650 and F-750 medium-duty trucks starting next year, bumping out the Cummins ISB6.7 now used in them.

Ford and GM do not offer diesels in their half-ton pickups. “Customers think they want it,” Todd Kaufman says. “The reason it’s not good is the tremendous upcharge, and they wouldn’t get the power and economy to pay for it.” Dan Tigges at GM agrees. It’s an $8,000 upcharge over a large gasoline V-8, partly for the stronger and more costly Allison 1000 transmission that goes with the Duramax in a Chevy or GMC HD pickup. At Ford, the diesel premium is $8,460 over a V-8 or V-10 gasoline engine in a SuperDuty. GM will offer a small diesel in the upcoming midsize Colorado/Canyon pickups, but its standard power will be a gasoline I-4 and V-6.

Big gasoline engines

Although the upcharge for the smaller diesel V-6 in a Ram 1500 is just $2,850 vs. the 5.7 Hemi, Ram acknowledges its HD pickups and chassis-cabs cost an extra $8,000 to $9,000 when fitted with the 6.7 Cummins Turbo Diesel. So last fall it announced a large-displacement gasoline V-8 as an alternative. The 6.4-liter engine is called a Hemi and fits between the 5.7 and the Cummins diesel. This should be right for customers who have serious hauling jobs but want to stay with less expensive gasoline power. The newer gasoline engine has 410 horsepower and 429 lb.-ft., and although it uses more fuel than the Cummins diesel, it costs about $6,500 less to buy.

Ford has long had the 6.8-liter gasoline V-10 as standard in its heavier SuperDuty pickups, as well as its modular smaller brother, the 5.4 V-8. But lately those have been garnering more sales in the SuperDuties. Now 40 percent of them get gasoline engines, up from about 20 percent, with the rest going to the PowerStroke diesel, Kaufman says. GM’s 6.2-liter Vortec gasoline V-8 has also become more popular versus the Duramax in Chevy and GMC HD pickups as buyers look harder at purchase price as a part of the overall cost of ownership, Tigges says. Yet many customers bite the bullet and pay the price because a diesel simply has the higher output and longer life preferred for hauling heavy loads and towing heavy trailers that heavy pickups are often tasked to do.

Alternative fuels, meanwhile, continue to gain momentum, again due to economics. Fuel at half the cost of diesel and at least a third less than gasoline is a reality hard to dispute, even if the cost of entry can be high. Ford is the most active here, with conversions available for both natural gas and propane for all its V-8 and V-10 gasoline engines. The bi-fuel gasoline-compressed NG option for SuperDuties done with Westport Innovations has dropped in price from $12,000 to between $7,000 and $9,000.

GM and Ram also offer bi-fuel gasoline-CNG packages for their HD pickups, and they’ve expanded availability beyond the single models offered initially. Public fueling stations for CNG and liquefied NG are still limited, though more are opening almost every day. There are many more propane stations, though they’re still much more scarce than gasoline stations.

Several points to list about natural gas and propane for anyone considering a switch from gasoline:

  • The more miles driven, the more likely conversions pay. The threshold is similar to the 25,000 to 30,000 annual miles per truck that’s long been the rule for the gasoline-to-diesel switch.
  • Determine if fueling stations are close enough to use every day.
  • Evaluate the price history of the alternative fuel; pricing and availability vary around the country.
  • Seek government grants to help offset the cost of conversion. Clean Cities USA is one organization with regional and local chapters that can help.
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