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Old 08-12-2003, 06:18   #1 (permalink)
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U.s.a.:imports Eye Last U.s.-ruled Auto Niche: Pickups

Ford Relaunches F-150; Toyota, Nissan Quicken Own Efforts
August 11, 2003

Advertising Age
By Bradley Johnson

NEW YORK (AdAge.com) -- As Ford Motor Co. relaunches its vaunted F-150 pickup, it should check the rearview mirror: Import brands are on track to pick up share in the last category ruled by Detroit.

It appears to be a lopsided battle. Ford's F-Series is the top-selling vehicle in history and No. 1 seller for the past 21 years, and Ford is betting the farm on the flagship F-150. Owner brand loyalty for big pickups is the highest of any category. The Big 3 have 96% market share in large pickups; Toyota, the only import brand available, has just 4%.

In the near future
But five to 10 years out, import brands' big-pickup share could be "somewhere between 20% and 25% -- and that's probably being fairly conservative," said Fred Suckow, director of Nissan marketing at Nissan North America, which in December releases its own brawny entry, the Titan.

Toyota also has clear ambition to expand in the sector, albeit that the manufacturer does not want to overplay its hand. Ernest Bastien, Toyota corporate manager for vehicle marketing, said domestics are "clearly in command" of the big-pickup segment. Mr. Bastien added, "Our aspirations are really somewhat modest by comparison." But not subtle: Toyota in 2006 opens a Tundra factory in San Antonio, the heart of truck country.

"San Antonio economically probably did not make the most sense for Toyota, but from a marketing standpoint it made perfect sense," said Stephen Cavender, who runs a Toyota dealership in the city. "The plant is easily expandable."

Bigger, fancier, more expensive
It's no surprise more players want to join the ultimate pickup game. Sales doubled over the past decade to 2.2 million pickups, and models got bigger, fancier and more expensive as the market shifted from work trucks to personal use. While new entries are appearing, category growth has stalled. Analysts don't expect much growth going forward; the use of rebates and other incentives is increasing, and it will be a market share game.

Toyota and Nissan together should command 8% to 10% of the big-pickup category within two to five years, said Jeff Brodoski, an analyst with con******cy J.D. Power & Associates.

Yet Mr. Suckow's longer-term view is plausible. Nissan's first-year sales target is 100,000 Titans. By 2007, Toyota will have capacity to build 250,000 Tundras. Meanwhile, Hyundai Motor America and American Honda Motor Co. are rumored to be preparing pickups; neither would comment for this story. In five to 10 years, Mr. Suckow said, Toyota could get 10% share, Nissan may snare 7% to 8% and Honda and Hyundai might split 3% or 4%, giving import brands a big-pickup share roughly even with Japan's 22% share of the overall U.S. light-truck market.

Marketing advantage
Big pickups have been an anomaly, a segment where Detroit faced almost no competition. The big pickup is a uniquely American product; customers, especially in the core work market, have tended to be loyal to Ford, Chevy or Dodge in particular and domestic products in general. Barriers to entry are high: Customers expect numerous varieties of engines, cabs and beds; a 25% tariff on truck imports means a foreign company needs to assemble in the U.S. to be competitive. Domestic brands have a marketing advantage: a long reputation for selling tough trucks communicated with hard-hitting truck campaigns.

But Mr. Bastien noted one-fifth of domestic big-pickup owners already have an import vehicle in their garage. Nissan's Mr. Suckow said "the modern truck guy," who uses the pickup for personal use, is more likely to consider an import truck. Japanese companies aren't new to the overall pickup market, having sold small pickups for decades.

Still, to compete import brands need strong products -- and advertising. Rosario Criscuolo, chairman of the Toyota Dealer Council, expects Toyota to do a separate truck campaign. Said Toyota's Mr. Bastien: "We are looking very carefully at what type of communications we should have to support our trucks," though "we don't want to be in the position where we subrogate our car brands to a truck brand."

No one suggests the Japanese will take over the big-pickup category. "It will take 25 or 30 years before there is parity," said Mr. Criscuolo, a Lansing, Mich., Toyota dealer.

27 million sold since 1948
General Motors Corp. is the biggest seller of large pickups if its Chevrolet and GMC sales are combined, but Ford's F-Series is the top-selling vehicle brand. Ford has sold 27 million F-Series since the line began in 1948. F-Series sales last year (813,701) were nearly double those of the top car, Toyota Camry (434,145). Merrill Lynch auto analyst John Casesa said F-150 is Ford's largest single profit contributor with an estimated margin of at least $6,000 a truck.

Ford, recovering from financial losses and other setbacks, is laboring to avoid quality glitches that beset its recent product launches. The new truck is getting good reviews -- and the old F-150 led its segment in J.D. Power's initial-quality and vehicle dependability studies. Said Todd Eckert, F-150 marketing manager: "There are going to be viable competitors in the market, but we believe we have the product ... to meet them head on."

Follow the leader
Japan is following the leader. Toyota's first big pickup, the 1993 T-100, was underpowered. Its replacement, the slightly undersized Tundra, is solid but not fully competitive with Detroit's best, said Jim Hossack, a con******t with researcher AutoPacific Group. Mr. Hossack said the brawny Nissan Titan is a strong contender, and he said Tundra will get more competitive with a redesign down the road.

All of this is reminiscent of minivans: After their early models fizzled, Japan redesigned the vans to meet needs of American buyer -- and took Japan's U.S. minivan share from 9% in 1995 to 30% today. Likewise, Japan was late to embrace sport utilities, but it's since grabbed more than one-third of the category.

~ ~ ~
Jean Halliday contribiuted to this report.
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Old 08-14-2003, 21:52   #2 (permalink)
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LA Times

Detroit's state of mind
U.S. automakers feel secure in their dominance of full-size pickups. But regaining market share in cars is a tall order.

By Jim Mateja, Chicago Tribune

It doesn't take much to rile outspoken General Motors Corp. Vice Chairman Bob Lutz, especially when the conversation turns to the Japanese automakers.

"The media perpetuates that if you are cool, you buy an import, and if you can't read, you buy a domestic," he griped recently.

Lutz also becomes a bit unhappy when the conversation turns to the fact that Nissan Motor Co. will join Toyota Motor Corp. this year in offering a full-size pickup truck in a segment long dominated by the domestics.

"Consumers have been disappointed with our cars in the past, which led to the exodus out of our cars and into Japanese cars," Lutz said. "But consumers haven't been disappointed with our trucks. No one has said: 'Now that Toyota has a truck I'm getting out of my Chevy and into a Tundra.' That's not going to happen."

The 2000 Toyota Tundra, with its V-8 engine, was the first true full-size pickup from a Japanese automaker. In December, the Nissan Titan will become the second.

The Chevrolet Silverado accounts for about 650,000 units annually, second to about 800,000 for the market leader, the Ford F-150. The Tundra sells only 100,000 units, the target Nissan has set for the Titan.

Toyota and Nissan say their trucks are intended for their current customers who own compact pickups and need to move up to something bigger.

However, Nissan notes that the Titan is slightly bigger than the F-150 and will offer a bigger V-8 engine, which certainly sounds as if the Japanese company intends to lure a few drivers out of the F-150, if not also the Silverado, and into a Titan.

Time will tell.

With the pickup truck market reasonably secure in U.S. hands, what will it take to get back those consumers who made an exodus to imported cars from domestics?

Lutz's answer: "Fresher product and we have that coming a stronger economy and import pricing that takes into account exchange rates, plus limited- edition, gotta-have vehicles like the Chevy SSR and Cadillac XLR, cool stuff that gets back the attention of the public and gets opinion leaders to change their attitudes about us and tip the opinions of others."

Jim Padilla, president of Ford's North American automotive operations, says fresher product will help domestic automakers, but so will a stronger economy and, especially, more favorable exchange rates.

The weaker the yen, the more you get for a dollar and the more money the Japanese make, so they don't need to raise prices to post a profit.

At the moment, the exchange rate is about 118 yen to the dollar, whereas in the mid-'90s it was about 90 yen to the dollar.

"The Japanese have taken huge advantage of exchange rates," Padilla said.

But will domestic automakers take full advantage if the yen strengthens? In the mid-'90s, the strong yen forced the Japanese to raise prices.

"The Japanese raised prices quickly and substantially based on the exchange rates, but Detroit raised prices too," said industry analyst Art Spinella, general manager of CNW Marketing/Research in Bandon, Ore.

Detroit could have held prices steady, taken advantage of exchange rates and undermined Japanese market share, "but if Toyota went up $50, the Detroit automakers went up $49," Spinella said, calling the American manufacturers' moves shortsighted.

Incentives have become a staple of the auto industry. Will they ever go away?

"That's the same question people asked in the '80s," said Ford President Nick Scheele. "Incentives may never go away, but as the economy gets stronger you'll have less incentives," as was the case in the mid-'90s.

"You can't bet on a home run every year; that's like betting on double zero coming up every time on the roulette wheel," he said. "But we have new product coming at lower volumes, so we won't have to incentivize the new product."
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Old 08-15-2003, 00:07   #3 (permalink)
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The new F-150's coming out in a year or so look a lot more like a truck should. They definitely gave it a more aggresive look.

I don't see any major shifts in the F-150's market dominance happening anytime soon.
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Old 08-15-2003, 06:52   #4 (permalink)
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Re: U.s.a.:imports Eye Last U.s.-ruled Auto Niche: Pickups

Quote:
Originally Posted by '92BigBronco
The new F-150's coming out in a year or so...
The new F150 is in production NOW. It'll be on showroom floors shortly.
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