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Big Change for Small Trucks

Some things you can always count on. The other line always moves faster than the one you're in. The Oscars always run late. Your fingers. But that list is getting shorter. The day is coming when pickup trucks no longer will be body-on-frame vehicles. Not small pickups, anyway. As auto makers ponder weight-reduction strategies in a bid to comply with 2020's 35-mpg (6.7 L/100 km) fleet fuel-economy

Some things you can always count on.

The other line always moves faster than the one you're in. The Oscars always run late. Your fingers.

But that list is getting shorter.

The day is coming when pickup trucks no longer will be body-on-frame vehicles. Not small pickups, anyway.

As auto makers ponder weight-reduction strategies in a bid to comply with 2020's 35-mpg (6.7 L/100 km) fleet fuel-economy mandate, consumers are anxiously seeking new ways to stretch their gasoline dollar — preferably without sacrificing vehicle capability.

The result, according to industry executives and observers, is a trend that mirrors the market's ongoing migration from truck-based SUVs to car-based cross/utility vehicles.

“The small pickup market is a declining market,” says Frank Klegon, Chrysler LLC's executive vice president-product development. “It's probably the most open to interpretation.”

And the coming interpretation calls for lighter-weight, unibody construction.

Auto makers also are gambling that consumers will be willing to trade robustness for refinement, as evidenced by the soaring popularity of CUVs.

Of Chrysler's Dodge-brand, small body-on-frame pickup, Klegon tells Ward's: “I would expect that some time in the lifecycle of Dakota, I will see that go in a different direction.”

But he is guarded about timing.

“I don't know if it's the next one or the one after that,” Klegon adds.

Whenever it arrives, it won't be soon enough for a segment that has seen its volume reduced by half in less than a decade. According to Ward's data, small pickups accounted for 516,875 sales in the U.S. last year, compared with 1.1 million in 2000.

The decline coincided with a sharp increase in high-margin fullsize pickup sales, a jump spurred by aggressive pricing that encroached on compact-pickup territory.

“When you got into residual value and what it does to a lease payment, you're going to find that you could buy an F-Series for a very, very small premium over a Ranger,” says Stephen Landis, general manager of Elder Ford in Troy, MI.

And this trend is continuing, at least at Ford.

“We haven't sold a Ranger here in six months — not one,” Landis says, admitting the Blue Oval is not helping itself by neglecting its once-dominant entry and allowing it to die.

Ford's Twin Cities, MN, plant — site of Ranger production — is set to close next year. And the auto maker has made no announcements about a replacement or continued production at an alternate site.

Says Larry Dominque, Nissan North America Inc.'s product planning chief: “There is a realization that the fullsize and compact pickup transaction prices are almost completely overlapping now. This must somehow be changed over time. The compact pickup segment has suffered by the lowering of fullsize truck prices, which we do not expect to go back up.”

What is the future of small pickups in the U.S.? Do they even have a future with the current sales trend?

Dealer Kevin Collins of Bill Collins Ford Lincoln Mercury in Louisville, KY, thinks so.

“Small trucks are a segment that is shifting, and that makes it hard to figure out, but clearly there is a place for them,” says Collins, whose dealership is the largest in Kentucky. “Their fuel economy is better than a fullsize pickup, and not every truck buyer is looking for a big payload.”

His customer base for Ford Ranger compact pickups is broad.

“You'd think it would be youth-oriented but we have a lot of older people and a lot of females who buy them,” he says.

It's a segment that's not going to go away, maintains Tina Jantzi, J.D. Power and Associates' senior manager-North American forecasting.

If you need proof, consider Toyota Motor Corp. and General Motors Corp., the world's two largest auto makers, have unveiled unibody pickup concepts at auto shows this year. They were the Toyota A-BAT and GMC Denali XT.

Two years ago, the Chicago Auto Show saw the debut of the unibody Dodge Rampage pickup. (Klegon calls the A-BAT “a Rampage ripoff.”)

Meanwhile, in a telephone interview with Ward's, you could almost hear the grin on the face of American Honda Motor Co. Inc. Vice President Dan Bonawitz.

“We're very excited to see that,” Bonawitz says of the arrival of more unibody pickups similar to Honda's Ridgeline.

“By others showing concepts, they're validating (Honda's direction) and will bring more attention to the unibody pickup like Ridgeline.”

The Ridgeline launched to considerable skepticism in 2005. Honda says the truck has sold as well as expected, hovering near the 50,000-unit level annually.

But Bonawitz says Honda is in the segment to stay — with the Ridgeline.

“It's really only about midway through its lifecycle, presently,” he says. “We do think it's a very valuable concept. And by the introduction of some of these other concepts, we'll draw more attention.

“It's our highest conquest vehicle,” Bonowitz continues. “We're getting in-flow from other trucks like the F-150, as well as passenger cars.”

According to Power Information Network data, former fullsize pickup owners represent the highest percentage of small pickup buyers at 28.8%. Repeat small pickup buyers made up the next highest percentage — 27.1% — followed by conventional compact car buyers at 9.3%.

Jantzi sees the segment shrinking further before leveling off at about 450,000 U.S. sales annually.

“We're watching that A-BAT, the Toyota model,” she says. “(Unibody pickups are) definitely a trend that is going to appear. It's not just going to be a fad or something.”

Like Klegon, Toyota's Kevin Higgins is non-committal.

“A lot of times we've unveiled products that are pretty close to coming to market,” says Higgins, Toyota Motor Sales U.S.A. Inc.'s corporate marketing manager-North America. “(The A-BAT) truly is a concept vehicle to gauge reaction to whether or not there's an interest. By no means do we see this as the replacement for Tacoma or the new direction for Tacoma or anything like that. We see this as somewhere south of Tacoma.”

Collins notes: “If it's a concept, it means they're not sure.”

So far, the reaction to the A-BAT is “a little polarized,” Higgins admits.

“The true truck enthusiast says, ‘That's different from where I'm at,’” he says, adding it could have some appeal for “someone who's sitting on the fence.”

A car-based pickup truck hardly is a revolutionary idea, says dealer Jack Fitzgerald head of Kensington, MD-based Fitzgerald Auto Malls, a 12-store, 35-franchise operation in three states.

“Remember the Chevy El Camino and Ford Ranchero?” he says, referring to two such vehicles dating back to the late 1950s and peaking in popularity during the 1960s. “All they needed was a backseat.”

Despite small pickups' potential for improved fuel economy, and the encouraging data from J.D. Power, Higgins says Toyota has no designs on fullsize pickup buyers.

“It is one of the highest loyalty segments,” he says, adding a significant percentage of fullsize buyers use them commercially. And there are no alternatives that feature the same capacity for towing and payload.

“The only other (segment) that's slightly higher in loyalty is fullsize van, because those people have nowhere else to go,” Higgins says.But Russell Clark, executive director-product development for Buick, Pontiac and GMC, suggests there is some crossover potential.

“The pickup market is so huge, there are a lot of fragments and sub-segments in it,” Clark tells Ward's. “Some of them will never go away — like the guy who needs the regular-cab pickup to haul his plumbing tools. He has to have something because that's his livelihood — same with a lot of the heavy-duty stuff. People haul campers.

“But there are also people who buy pickups who might say, ‘You know, I don't really need all that all the time,’ and they could use something like (the Denali XT).”

Apparently, GM, Chrysler and Toyota all recognize the need for flexibility because each of their concepts features a version of a midgate that, when deployed, uses part of the truck's cab to supplement their respective cargo beds.

The Rampage takes a page from the Ridgeline's playbook by including a drawer under its bed. Because there is no rear differential, the drawer can accommodate a sheet of plywood without using up valuable space in the cargo bed.

The Denali XT set tongues wagging because it evokes strong imagery from Detroit's 1970s glory days, a time when the car-based Chevy El Camino and Ford Ranchero pickups were redefining industry segments.

“From many angles, it looks like a car — until you get up close and you see the bed,” he says.

These vehicles resonate today as American icons, Clark adds.

“There's definitely an image that goes along with buying a pickup truck here in this country,” he says. “It says, you're the salt of the earth, a solid individual.”

Currently, however, the macho aura doesn't extend to unibody pickups, industry insiders admit. But their time is coming.

“If it's a younger guy, unibody's not going to be a problem,” Landis says. “If it's an older guy, it's going to be a problem.”

That's because fullsize pickups are “not a life-stage vehicle, but a lifetime vehicle,” Higgins says.

But the market is subject to the forces of nature. And nature abhors a vacuum.

Two auto makers, American Suzuki Motor Corp. and Mahindra and Mahindra Ltd., are preparing to bring new small pickups to the U.S. — body-on-frame, no less.

“If you're going to tow a boat, you're really going to want a body-on-frame vehicle,” says Steven Younan, American Suzuki product planning director.

“Since a lot of the direction for Suzuki is to develop this truck to meet the needs of the million-plus customers who bought motorcycles, ATVs and marine engines, then it makes a lot of sense for us to keep with that program for a body-on-frame vehicle, which is obviously more robust for off-roading as well.

“If your goal in life is to have a vehicle for other purposes like a fleet delivery truck or a landscaping business or something like that, then maybe that's a different market,” he adds. “We're targeting a certain buyer mentality, a buyer need.”

Suzuki hopes to sell between 7,000 and 10,000 Suzuki Equators when the truck launches later this year. It will be based on the Nissan Frontier.

Mahindra has plans for an Ohio site, believed to be near Springfield, where it would assemble small pickups from knocked-down kits imported from its home base in India. Production would start in 2009 with a truck powered by a 4-cyl. diesel engine.

The auto maker would follow up in 2010 with a diesel-hybrid version.

Clearly, however, Mahindra's approach is more hard-core than its competitors. And it's talking tough.

“No other manufacturer is offering a diesel in that segment,” says spokesman John Reinan. “Mahindra is going to have the largest cargo bed and the biggest payload of any truck in its class, almost double the payload of some of its competitors. So you're going to have a truck that's smaller than an F-150 that can haul 2,600 lbs. (1,179 kg) and have a diesel engine with high torque and great reliability and better gas mileage. And a 6-speed automatic transmission standard.”

According to Ward's segmentation, there are 10 nameplates in the U.S. small-pickup market. If the Ranger disappears along with the Chevy Colorado and GMC Canyon — industry forecasts put the future of the small pickups in doubt, although GM says such talk is premature — there would be at least nine remaining with the addition of Suzuki and Mahindra.

But Ford and GM also could remain in the game if the World Trade Organization's Doha talks conclude this year as some predict. An agreement would circumvent the prohibitive tariff, known colloquially as the “chicken tax,” levied against imported pickup trucks.

Ford and GM build small pickups in Thailand for export to other Asian countries. These trucks were the focus of an earlier round of tariff-reduction talks, but those discussions were abandoned after last year's coup in Thailand.

So what is Ford planning? Derrick Kuzak, the auto maker's product development guru, isn't saying much.

“What you're going to see is probably both approaches. Even on body-on-frame vehicles, there's still the opportunity to improve fuel economy through attention to detail, such as weight-reduction, (direct-injected, turbocharged) engines and advanced transmissions,” Kuzak tells Ward's.

“That is clearly one path. You can also take a pickup truck and reduce some of the capability, because there are a lot of customers that don't necessarily need all of the payload and towing capability. So it's possible to reduce some of that capability while still providing a very functional truck. Better engine, better aerodynamics can get to very substantial fuel economy improvements.”

Whatever Ford does, Landis hopes it happens soon.

“Give us a Ranger replacement,” he says. “Unibody would be OK. There's certainly a need for it, a niche for it.”

And a need for something else, says Fitzgerald.

“Everything in this business today depends on vehicle quality to succeed,” he says. “Otherwise, it's a long walk up the hill.”
with Tom Murphy, Christie Schweinsberg, Byron Pope and Steve Finlay.

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