Changing Pillars of Profitability: Viable Substitutes … Pillars of Profitability: Viable...

Changing Pillars of Profitability: Viable Substitutes for Mid- and Full-Size SUVs

Rebecca A. LindlandAssociate Director, North America Sales

Copyright © 2006 Global Insight, Inc. 22006 GLOBAL AUTOMOTIVE CONFERENCE

• Traditionally, full size pickups and mid- and full-size SUVs (including premium) have been the pillars of profitability for the Big 3

• It is not unusual for these 3 categories of products to comprise the vast majority of the total product profitability of the Big 3

Pillars of Profitability: Where Has Profit Traditionally Come From?


Sales of Big 3 F/S SUVs and Pickups 1995–2006

• This formula contributed significantly to the bottom line of the Big 3 from 1995–2004

0.000.501.001.502.002.503.003.504.004.505.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

FULL SIZE PICKUPS FULL SIZE/PREM SUV MID SIZE SUV

(in millions)


Forecast of Sales of Big 3 F/S SUVs and Pickups 2006–2011• The pillars are becoming smaller and smaller,

losing nearly a million units from 2005 to 2011—half of that is lost from 2005 to 2006

0.000.501.001.502.002.503.003.504.004.505.00

1995 2000 2005 2006 2007 2008 2009 2010 2011

FULL SIZE PICKUPS FULL SIZE/PREM SUV MID SIZE SUV

(in millions)


• We think F/S pickups will prove to be more resilient than some presently believe– A large percentage of pickup buyers have some need

for the real capabilities of the vehicle– The Great American Single Male…or Female…views

the full-size pickup as the ultimate “pick up” vehicle– It is the quintessential American vehicle

That’s The Bad News For Pickups.What’s the Good News?


Forecast of Sales of Full Size Pickups from 1995–2011

• Pickup sales for the Big 3 grew substantially from 1995 to 1996 and again in 2004 and 2005

• Competition from Toyota Tundra and Nissan Titan cuts into further growth, but overall the forecast settles at 2.25 million units

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0.50

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1.50

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2.50

3.00

1995

1996

1997

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GM FORD CHRYSLER TOYOTA NISSAN

(in millions)


• Mid-, full-size and premium SUV sales have suffered this year– Consumers can move out of mid- and full-size SUVs

and into CUVs more easily than pickup buyers– Gas prices, changing consumer preferences,

and improvements in styling and functionality of crossovers have accounted for declines in SUV sales

What About Mid-, Full-Size and Premium SUVs?


Forecast of Big 3 Sales of Mid-, Full-Size and Premium SUVs from 1995–2011

• The peak of sales in 2002 was 2.2 million units, led for the most part by mid SUVs

• We are expecting volume to decline to about 1 million units for the Big 3 by 2011(in millions)

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0.50

1.00

1.50

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2.50

1995

1996

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MID SUV FULL SIZE SUV PREMIUM SUV


• Consumers really don’t want to give up their SUVs. They just want them to be more efficient, refined, and comfortable– This opens up the potential for:

• Significantly more refined SUVs • Large, capable crossovers (CUVs)

That’s the Bad News for SUVs. What’s the Good News?


0

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

MID CUV LARGE CUV MID PREMIUM CUV LARGE PREMIUM CUV

Forecast of Big 3 Sales of Mid-, Full-Size and Premium CUVs from 1999–2011

• GM debuted the Aztek and Rendezvous in 2000. The Aztek ended in 2005 and the Rendezvous ends production in 2007

• GM and Ford both are heavily expanding their CUV lineups in 2007• Chrysler only has entry CUVs (Jeep Patriot, upcoming Chrysler CUV)


• CUV pickups like the Honda Ridgeline or Dodge Rampage concept– This is the ideal pickup for someone who does not

“need” a pickup– A segment with lots of potential beyond the Ridgeline,

but the Big 3 need to take the same risk and bump up the macho factor

Some Other Concepts Could Provide Pillars of Profitability


• It doesn’t have to be all about trucks, though…Large, rear-wheel-drive American cars with attitude might just be the savior of the American passenger car business– RWD proportions – Expressive, heritage-driven design– Wide choice of power trains (V6, V8, special editions)

• Chevy, Ford, and Dodge enthusiasts, having suffered through 25 years of bad copies of Japanese cars, are primed for the return of these cars

Cars Should Not Be Left Out of the Profitability Picture


• Chrysler Group’s Hemi engine has revitalized the Dodge brand, even with today’s high gas prices—thanks to displacement on demand, the Hemi delivers pretty terrific highway fuel economy

That Thing Got a Hemi? or a Small Block? or a Hybrid?

– Dodge Magnum R/T w/AWD Hemi V8 5.7 liter/345 cu. in. 340 HP

– Chevrolet Impala SS V8 5.3 liter 325 cu. in. 303HP (no AWD though)

– Toyota Highlander Hybrid w/AWD V6 3.3 liter/201 cu. in. 268 HP

– 24 MPG $32,345

– 28 MPG $26,330

– 27 MPG $39,290


• GM, Ford, and Chrysler’s balance sheets are under tremendous pressure with the traditional sources of revenue shrinking

• But, the American consumer is not going to give up SUVs, CUVs, or pickups without a fight

• Concepts such as the combo CUV pickup, aggressively styled crossovers, polished SUVs and cars with swagger all have a place in the market

• Powertrain technology can address some of the fuel efficiency concerns

• The Big 3 need to emphasize heritage and distinctively American styling and performance to win consumers into showrooms

Conclusions

Thank You

Rebecca A. LindlandAssociate Director, North America

E-mail: [email protected]

Date post:	17-Mar-2018
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