The following article is part of the GM Authority Opinion Desk series, where our authors share what is on their minds.
Sales of General Motors’ full-size pickup trucks — the Chevrolet Silverado and GMC Sierra — grew 6.65 percent in the first nine months of 2014. Specifically, the Silverado grew 5.93 percent to 382,153 units, while the Sierra grew 8.56 percent to 147,298 units. And while those are both great results, what might not be so favorable is the fact that only one of those actually grew in market share — the GMC Sierra.
Yup, market share of Big Red’s big truck reached 9.79 percent, up 0.18 percent on a year-over-year (January-September) basis. The Silverado’s share actually dropped 0.14 percent to 25.39 percent. Both figures are rather disappointing given that both trucks are all-new for the 2014 model year. By comparison, the big winner when it comes to market share is the (Dodge) Ram, which posted a 2.65 percent year-over-year increase, while Ford’s F-Series declined 2.59 percent in the midst of the automaker retooling its plants for the next-generation, aluminum-bodied truck.
January 2014 - September 2014 YTD 2014 Pickup Truck Sales
| MAKE & MODEL | JANUARY - SEPTEMBER 2014 SALES VOLUME | JANUARY - SEPTEMBER 2013 SALES VOLUME | JAN-SEP 14/JAN-SEP 13 SALES VOLUME +/- | JANUARY - SEPTEMBER 2014 MARKET SHARE | JANUARY - SEPTEMBER 2013 MARKET SHARE | JAN - SEP 14/JAN-SEP 13 MKT SHARE +/- |
|---|---|---|---|---|---|---|
| TOTAL FULL-SIZE PICKUPS | 1,504,912 | 1,412,802 | 6.52% | 100% | 100% | 0.00% |
| CHEVROLET SILVERADO | 382,153 | 360,775 | +5.93% | 25.39% | 25.54% | -0.14% |
| GMC SIERRA | 147,289 | 135,670 | +8.56% | 9.79% | 9.60% | +0.18% |
| GM TOTAL | 529,442 | 496,445 | +6.65% | 35.18% | 35.14% | +0.04% |
| FORD F-SERIES | 557,037 | 559,506 | -0.44% | 37.01% | 39.60% | -2.59% |
| RAM PICKUP | 319,868 | 262,787 | +21.72% | 21.25% | 18.60% | 2.65% |
| TOYOTA TUNDRA | 88,869 | 81,821 | +8.61% | 5.91% | 5.79% | +0.11% |
| NISSAN TITAN | 9,696 | 12,243 | -20.80% | 0.64% | 0.87% | -0.22% |
Given these numbers, it’s difficult not to wonder about what could be wrong with GM’s trucks or their go-to-market strategy.
But consider this: in September 2014, GM’s incentive spending as a percentage of Average Transaction Prices (ATPs) was 11.1 percent. That’s a 0.2 percentage point increase from August 2014, but the lowest of all domestic automakers by a wide margin. What’s more, GM’s calendar-year-to-date spending as a percentage of ATPs is 10.7 percent, down 0.3 points. Meanwhile, industry spending is 10.0 percent, up 0.4 points. In other words, the industry is outspending GM when it comes to transaction-sapping incentives. GM’s approach tends to increase per-unit profits, but stifles market share growth, which is purely a game of sales volume.
And therein lies the danger of GM’s strategy: it drives profits, but gives pickup truck buyers the ability to sample and purchase a competitor’s truck. And in this case, the competitor to watch is obviously Ram, which has been loading its trucks up with sky-high incentives, ones that are significantly higher than those offered by GM on Silverados and Sierras. Ram’s strategy, by comparison, seems to have a laser focus on market share at the expense of per-unit profitability.
Now, any product pusher marketing professional knows the inherent risk and associated problems with letting customers slip away. The biggest peril revolves around the difficulty of bringing a “lost” customer back to the brand from which they switched. Not only is doing this much more expensive than simply keeping (retaining) the customer, but it is also significantly more difficult, as the customer is now breathing and living the product, not to mention being aligned with the brand that they switched to. And persuading truck customers (as opposed to car and crossover buyers) to switch is an especially difficult endeavor. Like trying to get Michigan football fan to suddenly root for Michigan State.
In the long run, GM will probably significantly change its go-to-market strategy after Ford finishes retooling its plants and launches its all-new 2015 F-150. But with so many Chevy and GMC truck buyers now in Ram pickups, one has to wonder if The General should have offered more incentives sooner, a move that most likely would have prevented Dodge from posting double-digit growth figures to begin with.
As one GM dealer put it: “Now, we’ll have a hell of a time getting those customers back into a Silverado or Sierra.”
Comments
Multiple GM brass have gone on record saying market share isn’t a top concern anymore.
True, but as market share drops, profits may drop, too, as customers are forever lost.
Ram wad never a real contender, until now. Fiat seems to have a fantastic handle of the truck and SUV market. Both GM and Ford now have a true rival.
I think what is missed here is the big picture.
The reality is going forward automakers are not going to be able to sell large Half ton trucks with V8 engine forever at 2 million units per year.
While the CAFE is not as high on the trucks as it is on the cars in 2025 there is no way they can meet even their standard as they are today. You can make them all out of aluminum and slap a Diesel V8 in them and they will still not meet the levels that are coming.
Engineers has stated time and time again mass I important. While aluminum and lighter steels will help the size of the vehicle will have to be altered too.
Now with that said how do you limit the most popular vehicle in the market but keep profits up? You raise the price and cut incentives. This will reduce sales but keep you profitable.
Now where do you earn back market share? Well you build lower mass smaller trucks with 4 and V6 engines say like a hmmm…… Colorado or Canyon.
Next you address your 3/4 ton and one ton trucks as they will not be hit with CAFE as hard and you can move buyers to these trucks that really need a full size truck.
You can watch as GM will add aluminum to all their trucks at some point but they will really push the smaller trucks to offset the MPG and make them even lighter in the future. Ford will continue the aluminum F150 but prices will rise in the future to limit sales and you will see a Ranger here at some point.
As for Ram I am not sure they really know what they are doing yet. I have heard small trucks and even FWD trucks there. It may be too soon to expect them to have a plan as they are still way behind coming out of Chapter 11 and Fiat is not exactly flush with cash either. They will grow their share some but they will not make any where near the same money. Also many of their buyers are people looking for a bargain they tend not to be as loyal as GM or Ford owners. Often they get a buyer for one truck and then they return to their regular brand as they know why they got a deal. You get what you pay for too often and they find out when they own a Ram for very long. Ram is also picking up in fleet sales and that is not good for resale or profits.
The fact is there is a major play in action here and there will be some major changes to how trucks are built and sold.
This is not just about a 2-3 year deal this is just the start of a 10 year deal to make changes in the market on what you can buy and how trucks are going to be sold to max profits and protect market share as it evolves.
There is a lot of people in Detroit holding their breath here as this is a major deal. This is the one area that has kept Detroit afloat for years and now they have no choice but to change the formula they have lived with for years. They do not want to talk about it but they have to make the changes slow and precise as a mistake or miscalculation here could damage a company in a major way. The trucks are the profit center that are paying to revamp the car lines. They can not afford a failure here as it could damage a company in all areas with a truck market mistake.
Either way this in the end the market share will be about what it is now and unless Ram can build a real truck that will win people over for more than just price they will have issue of their own to deal with there. You can only win people with cheap trucks for so long and you really will need to retool and build a better truck as Ford and GM will.
FACT….When the Ford F150 comes out watch out for skyrocketing insurance premiums due to fact that once it is involved in a collision the repair cost associated and the procedures needed to restore pre loss condition are astronomical and in turn insurance companies will be shelling out more dollars to repair them.
You are correct. Aluminum can not be repaired and even the smallest damage now has to have the panel replaced by a shop that can do aluminum panels.
Also watch as Ford will hide the price of the new trucks in the options. Base price will be a modest gain but the options and option packages will see a mark up on each that will lead to overall higher sticker prices.
Facts:
The new F150 may increase insurance rates Only 10% because of the Modular design that will reduce repair labor n parts costs plus many shops are already aluminum certified..,!
This will put the new F150 insurance cost on par with GM n Ram since current F150 is lowest ins cost.
Get informed… All of the early reviews of the new F150 are outstanding n position the F150 way ahead of GM n Ram and raise the bar for years before competition can catch up…!!!
Plus the new 2.7 EcoBoost is the Surprise n Delight standout feature that is a real game changer…!!!
Ram over supply of EcoDiesels will be sitting on their car lots collecting dust while new F150 n 2.7 EB takes back marketshare with a superior product n not cheap discounts like Ram…!!!
Sorry it is not going to be as cheap and easy as your marking release is here.
Most shops are not suited for aluminum. Many will have to seek shops even in other towns. Most trucks are in rural areas and they are lucky to have any shop let alone one that can deal with aluminum.
In the end I expect at least a 20-25% increase in cost for the early years and it will decline as the market increases the use of this material.
I am informed as I never said it was a bad truck. There will be growing pains and added cost to the Ford as well as the Chevy going into the future. The use of aluminum and Turbo engines will add more cost and less incentives to the trucks hence a lower volume on the half ton trucks. This will increase the sale of the smaller Colorado, Canyon and soon to be announced coming of the Ranger. This all comes down to the point Aluminum and Turbo V6 engines will not be enough for everyone post 2025. If anyone needs to stop looking into the headlamps and missing the whole picture it is you and your biased hype.
We all expect the Ford to have an advantage now as it is the newest truck on the market. If it did not then someone really screwed up.
The 2.7 is a great engine but it is not a game changer. The marketing at Ford has been great on this engine even with out your biased help. Ford has with the Ecoboot marketing convinced many they invented the Direct Injection Turbo with or ever making the claim. GM and Audi had it long before but both failed to market it properly. I have owned a DI Turbo longer than Ford has offered them and even my 08 is a better engine than the Ecoboot 4 Turbo.
The long and short of it is Ford will do fine with this truck but it is not going to all be an easy road to drive. They will have to deal with issues that will come up and horror stories of the people who first have to get repairs leaking out but the cost will come around. It is never easy being first to the market with a higher cost material.
If you want to be taken seriously here you need to start playing with reality and present both sides of the argument. As of now even the legitimate claims you make are passes over do to the foolishness of just a few of your claims. While you may not be worried Ford has been working to reduce the cost and still worries about the impact on prices.
Ford needed to move ahead here on this as their trucks were the heaviest on the market and that was an even greater risk moving ahead. Even with their weight loss they are only a few hundred pounds less than the present GM trucks. GM can get 200-300 pound they lack with some changes to the present truck but we will see them also make use of Aluminum un a couple years and leap back over Ford with a 400 pound advantage. that is just how the game works.
As for Ram I worry as they have not shown signs of much with what there plans are and you can only discount for so long. I expect Fiat understands they need the income from these trucks and to realize the long term income they need to have trucks they don’t need to slap as large of discounts on. Also they need a comprehensive small truck plan as the Diesel is not going to save them alone in the half ton segment. I assume they have something coming but how much later than Ford or GM? We have only seen one smaller truck Mule and it may have not even been for North America.
This is a segment I want all three MFG to do well in as our auto market depends on these for income to bring us all the cars we want or like. Without it we would not have the V8 and many of the other cars we love would not get the investment they do receive from the truck income.
So fan boy get it together most here are informed enough that you fool few here. All you do is damage your legitimacy on the things you are correct on.
Outstanding article , Manoli , Ram has been following Ford in the yearly refining of its trucks and being innovative . The smaller diesel is a good example of this innovation , Ford with weight loss . Will the Ram get the estimated 40 mpg , considering the weight of these vehicles , assuredly not , but it will attract a lot of customers to a great truck . It is pointless to play the ” who markets the best truck ” game . Ford and Ram innovate and refine yearly , GM plays the catch up game . All are fighting for the customer and the customer is reaping the benefits …discounts and interest rates , freebies ….you name it . It’s a great time to be a truck buyer , and if you really need one , wait and just watch the fur fly in the new year !!
Switched from a Chevrolet Silverado to an Eco Diesel powered Ram pickup. I had owed GM pickup trucks since 1985. Ram was a better deal and a nicer truck than the Chevrolet Silverado. Plus the Diesel gets 30 MPG on the highway with no problem.
Unfortunately it’s only gonna get worse. Because how many people are gonna go from the Silverado/Sierra to the Colorado/Canyon trucks????? Especially in 2016 when you can get the “baby” Duramax
The small diesel is going to be added sales but do not expect many to drop their half ton V8 for one.
If every one who said they wanted a small Diesel bought one they would do fine but we know the truth and I expect them to be 10%- 15% of sales at best. Cost of the fuel and the engine option will always be limiting and the lack of love from most in the American market will always be a limiting factor. My fear is they will invest in this and then the Government will hammer again with more regulations that will only drive up the cost more.
As for Ram the best truck for the money is only going to get you so far. Too often this bites you back as you end up with a good truck when you could have had a better and then the cross over buyers return after marginal long term ownership results.
I know many a Ramcharger and Dakota buyer that was a one vehicle and out due to ball joints falling off and major rust issues. Also many cam issues too.
Ram really needs to get their plans in gear as they need a new full size by 2018 and no later. Also they will need a smaller truck to combat Ford and Chevy on these mid size vehicles that will prove to be popular. If gas goes up they will even be more popular.
Too many swallow the elephant and choke on the flea. There are some major issues here in this segment and they will not be solved just with cheaper prices on lower quality products and 4 cylinder diesels.
And then, of course, is what happens whenever you make your product too inexpensive. When you finally are forced to raise the price and drop the incentives your market share toilets. Eventually, Marchionne is going to need to price his trucks where they should be.
Why would I consider changing brands? Lets compare my ’13 Silverado to my ’03. The ’13 has headlights that are impossible to change easily, moved battery location very inconvenient, Autotrak 4×4 selector location very inconvenient, dual zone heater A/C controls way less user friendly, around town gas mileage no improvement. Other than it is newer, it definitely is not a better truck than my old ’03.