GMC Exec Sees No Easing of Pickup, SUV Surge

The combination of demand and refinement has been a boon to GMC, pushing up average transaction prices and take-rates for the brand’s upscale Denali range of luxury models.

James M. Amend, Senior Editor

May 17, 2016

4 Min Read
GMC Sierra Denali riding truck sales boom
GMC Sierra Denali riding truck sales boom.

WASHINGTON – Sales of tricked-out pickups and SUVs are booming, rivaled only by the equally red-hot CUV segment, and GMC marketing executive Tony DiSalle sees no limit to their popularity or profitability.

“We have no idea how high” truck demand will go, DiSalle confesses.

Traditional body-on-frame trucks closed April with 22.6% of the U.S. market, according to WardsAuto data, with pickups earning a 15.1% market share and SUVs nailing down 7.6% in a seasonally adjusted 17.3 million-unit sales environment.

If history serves as any indication, it’s easy to see why GM forecasters refuse to predict the peak. In December 2002, trucks commanded a record 40.2% of the market with SUVs outdueling pickups 20.8% to 19.4%. The market’s other recent peak, July 2005, saw trucks earn 39.3% of the market with pickups out front by a margin of 22.9% to 16.4%.

That would seem to leave a long runway ahead for trucks, especially with economic fundamentals such as housing starts and credit access in their favor.

Previous sales highs for the group, DiSalle adds, came during boom-bust cycles. Today’s truck comeback, after dropping to 16.4% of the market in recession-plagued August 2009, has been a gradual buildup, suggesting there’s more untapped momentum.

“We did not come out of (the recession) quickly,” says DiSalle, whose truck-centric brand owns about 3% of the U.S. market on sales last year of 558,697 units. “It is not talked about in terms of a traditional cycle.”

There also are a lot of old trucks on the road today, each averaging close to 13 years, which means replacement rates will continue to be strong.

By some standards, even GM’s current stable of Chevrolet and GMC pickups and SUVs could be considered aging. They were last fully redesigned in 2013 for the ’14 model year, but DiSalle says their luster has not worn off.

“Demand is strong,” he says of GMC pickup and SUV sales, which have surged 12.9% and 8.8%, respectively, so far this year. Industry sales of pickups are up 7.5% and SUVs are ahead 6.7% on year-ago. “We’ve seen no falloff.”

The trucks have become more comfortable, too, DiSalle says, making pickups and SUVs more favorable among families.

“They are more refined than ever,” DiSalle tells WardsAuto, citing items such as active noise cancellation technology on the Sierra Denali large pickup. “It has broadened their overall appeal.”

GMC Enjoys Tailwind

The combination of demand and refinement has been a particular boon to GMC, DiSalle notes, pushing up average transaction prices and take-rates for the brand’s upscale Denali range of luxury models.

Earlier this year, the brand enjoyed its best first-quarter sales since 2005 and Denali-trim models now account for 23% of deliveries. More than two-thirds of Yukon large-SUV sales are Denali, and the trim accounts for half of all Sierra deliveries. The Canyon midsize pickup will add a Denali model later this year.

“There is a lot of momentum in this brand,” DiSalle says.

The only headwind for GMC truck sales would the red-hot CUV segment, which so far this year owns 30.3% of the U.S. market, up from 28.6% year-ago. GMC is relatively weak in that segment, with sales of the Terrain and larger Acadia down 13.4% through April.

But every Terrain GM builds sees a buyer and a brand-new Acadia arrives at U.S. dealers in the next few weeks.

The ’17 Acadia gets smaller to improve maneuverability and demand less garage space, while a first-ever 4-cyl. option raises average fuel-economy ratings. It’s more nimble than before and creature comforts increase, while base models are $1,800 cheaper.

“We wanted an entry that hit the heart of the market,” DiSalle says.

As such, GM targeted the Toyota Highlander as a benchmark and DiSalle says his team performed more in-house visits with current Acadia owners to get feedback on what they would want in the redesigned model than GM ever has in the past.

“The topic of refinement kept coming up,” DiSalle says. “They told us, ‘I want you to notch it up.’”

But passenger-carrying capacity of the new Acadia decreases to a maximum of seven from eight on the previous model, and total cargo volume shrinks to 80 cu.-ft. (2,265 L) from 116.1 cu.-ft. (3,288 L). So GM will keep the older model on the market alongside the new one indefinitely.

“For the loyalists,” DiSalle says.

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