Fiat Chrysler (NYSE:FCAU)
1ヵ月 : から 1 2019 まで 2 2019
By Mike Colias
Pickup trucks that cost $50,000 or more were a rarity on dealer lots a decade ago. But Detroit's auto makers, eager for new sources of income, have been steadily yanking up truck prices -- and finding that buyers will pay up for better engines and more frills.
Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV have in recent years introduced trucks at price points well into luxury-vehicle territory, offering plusher interiors, more powerful engines and premium options like massage seats and touch screens the size of small TVs. Some trucks are even priced above $75,000, making them more expensive than certain luxury cars.
The rise in pickup-truck pricing was on display this past week when GM and Fiat Chrysler reported fourth-quarter earnings that were bolstered in part by robust truck sales in their home U.S. market. Ford last month said strong U.S. truck sales offset losses in each of its overseas businesses in the fourth quarter.
Customers like Don Newlon exemplify the new truck buyer. Mr. Newlon recently paid $52,000 for a dark gray Ram Laramie truck with a yawning sunroof, heated second-row seats and a video feed that shows a 360-degree aerial view of the truck's surroundings.
"I particularly love the surround cameras to park this beast," said Mr. Newlon, a 49-year-old small-business owner from southwest Ohio.
Such spending hardly counts as a splurge. Last year, pickup buyers paid more than $44,000 on average for a full-size pickup truck, 61% higher than a decade earlier, according to research firm J.D. Power. By contrast, the average price paid for all vehicles industry wide, rose 28% during that same stretch to about $32,500.
All three Detroit car makers have grown increasingly reliant on strong pickup-truck profits in North America to offset weaker results in China and other overseas markets. They're now narrowing their focus further on these hulking vehicles to drive growth this year and help fund future bets on electric and self-driving cars. Falling demand for passenger cars has also prompted auto makers to drop many less-profitable small car and sedan models and focus more on higher-margin trucks.
GM and Ford relied on trucks like the Chevrolet Silverado and Ford F-Series pickup to drive the vast majority of their global profit last year, analysts say, even though those models only accounted for only 10% to 15% of each company's total world-wide sales. GM's strength in pickups helped deliver a global operating margin of 8% last year, on par with German luxury car makers BMW AG and Mercedes-Benz parent Daimler AG.
Ram truck sales are also driving a disproportionate share of Fiat Chrysler's bottom line, along with its Jeep brand. The company's operating margin has climbed steadily since the company ditched two car lines in 2016, hitting 6.1% last year.
Detroit's edge in the U.S. pickup-truck market has been helped by a longtime 25% tariff on foreign-made trucks -- in place since the 1960s -- that has deterred competition and supported premium pricing. Barclays automotive analyst Brian Johnson has described the Detroit Three's lock on the market as an oligopoly.
Some analysts and executives wonder how long the frothy truck pricing can continue, as dealer lots get crowded with new pickup offerings. Ford recently introduced a new Ranger midsize truck -- matching a move made by GM five years ago to offer smaller pickups -- and Fiat Chrysler is set to launch a new Jeep pickup truck this year, called the Gladiator.
Last week, GM unveiled a revamped heavy-duty version of the Silverado capable of towing 35,500 pounds with a diesel engine -- about 10,000 pounds more than the maximum capability of trucks a decade ago. Ford has hinted that an upcoming version of its Super Duty pickup could top that towing power.
The proliferation of truck models could start to pressure pricing, Morgan Stanley analyst Adam Jonas said in an investor note Thursday. He expects GM's 2019 profit to come in below the company's forecast of $6.50 to $7 a share, citing "intensifying price competition in the SUV and pickup segments."
GM President Mark Reuss said the industry needs to be careful not to push truck prices too high. "The engineering challenge will be how we achieve more upside in the trucks without adding more cost and hitting that price ceiling," Mr. Reuss said last week.
Some analysts believe truck sales in coming years should hold up better than the broader auto market, barring an unexpected spike in gas prices. The average age of a pickup truck in 2017 was nearly 14 years, compared with about 10 years for cars, according to federal data, which points to further pent-up truck demand.
Ed Wachenheim, CEO of Greenhaven Associates, a major GM shareholder, believes many investors overlook the profit potential of Detroit's truck franchises. His firm owned 20.4 million GM shares as of Dec. 31, its top holding by value. The firm also owned about 32.8 million Ford shares.
"Eventually," he said, "investors will realize that these are fundamentally truck companies."
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
February 11, 2019 07:14 ET (12:14 GMT)
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