A GAME OF STRATEGY

A new era of choice has pickup makers maneuvering for advantage

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DETROIT -- From Ford's lighter aluminum F-150 to General Motors' stylish smaller pickups to Ram's light-duty diesel engine, the industry's dominant truckmakers have all shown their hands.

Now what?

This year will usher in a new era in the pickup market, with the Detroit 3 following distinctly different paths for their most profitable products. Each will pitch new technologies and ideas to truck buyers who in the past had to consider little more than the color choice for their V-8 pickup.

But as buyers get a wider array of choices, it becomes trickier for manufacturers to plot their market strategies. A high-stakes chess match is under way to protect market share in light of some potentially game-changing entries as pickup makers try to capitalize on resurgent truck demand.

Take GM. For six months it has had the freshest trucks on the market, leading to a leap of roughly $4,000 in the average transaction price for the Chevrolet Silverado and GMC Sierra, according to Edmunds.com. Yet its market share for November through January shrank to 32.7 percent, from 36.6 percent a year earlier, as Ford and Ram offered bigger incentives.

If that depressed market share sticks, it could drain as much as $800 million from GM's annual pretax profits, Barclays analyst Brian Johnson wrote in a research note this month. That helps explain why GM is sweetening pickup deals this month, offering more than $7,000 in discounts on some V-6 models.

But GM's tactical move could get even thornier this fall. The late 2014 rollout of the next-generation F-150 will afford GM the chance to give Ford a taste of its own medicine by offering aggressive deals on GM's full-sized trucks. There's just one problem: Cheaper Silverados and Sierras could stymie sales of the mid-sized Chevrolet Colorado and GMC Canyon just months into their debuts.

"That's our concern about the Colorado: Will the net price be far enough away from the Silverado?" says Greg Williams, sales manager at Rentschler Chevrolet in Slatington, Pa.

Things get complicated for Ford, too, as it prepares to launch the 2015 F-150, which is expected to achieve a big jump in fuel economy by shedding up to 700 pounds through the use of aluminum for the cab, doors and hood.

Ford boosted F-150 incentives 16 percent last year, the only pickup maker to increase them, according to Edmunds.com. Keeping the heat on for 2014 models could risk short-circuiting sales of the '15s when they arrive, around December.

GM North America President Alan Batey acknowledges that GM "gave up a little bit of share" amid larger discounts by Ford and Ram. But he says the pendulum could swing back.

"We actually think in some ways it pulled some of their customers forward because of the deals they were offering," Batey told Automotive News last month.

Rumors that the redesigned F-150 could hit 30 mpg in highway fuel economy have "all kinds of people asking when they can order it," says Robert Vermillion, operations manager at J. Wilderman Autoplex in Mount Carmel, Ill. But he also knows that the pending changeover will drive bargain hunters into the showroom expecting primo deals on the outgoing '14 models.

"They'll be looking for even bigger incentives later this year," Vermillion says.

Meanwhile, Ram's full-sized pickup market share last year rose to 18.6 percent, from 17.9 percent, amid buzz about the 25 mpg highway rating on its V-6 truck, which uses a stop-start system and an eight-speed transmission. Ram's new light-duty diesel engine arrives at dealerships this month.

The innovations pouring into the pickup market could start to fray the strong brand loyalty among pickup buyers, says Tom Libby, an auto analyst at IHS Automotive in suburban Detroit.

The Chevy loyalist who reads an article about Ford's aluminum plans just might find himself visiting a dealership that had been enemy territory.

"The competition is so fierce," Libby says. "There's definitely the possibility that will lead to more cross-shopping and conquesting."

The segment's laggards are investing too. Toyota launched a redesigned Tundra last fall, and Nissan hopes to lift its tiny market share by adding a diesel engine option for the Titan in 2015.

Mark Williams, editor of pickuptrucks.com, an enthusiast Web site, says the situation demands more expertise from salespeople "to know not just more about the truck he's selling, but about the benefits and liabilities of the competition."

"That's where that door gets cracked open," Williams says, "to something other than that same loyal truck buyer sticking with the same old brand."

You can reach Mike Colias at mcolias@crain.com.


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