LOS ANGELES (TheStreet) -- Ford (F) - Get Report built the compact Ranger pickup truck for 30 years but abandoned the effort in 2011 because it perceived that most buyers would be just as happy with an F-150 or a crossover.
Then again, it's not as if a lot of Ranger buyers existed back then. Sales had fallen to around 55,000 units in 2010, an 83% decline in just 10 years. And that's where GM (GM) - Get Report sees an opportunity.
Ranger "probably peaked in the mid-1990s," said Edmunds.com analyst Jessica Caldwell. "The segment did fairly well at its peak -- the domestics all had entries. But prices rose, and people decided that if they were going to pay that much, they might just as well buy a full-sized truck. And Ford needed to concentrate on other vehicles, like compact cars."
According to IHS Automotive's Polk, compact pickups accounted for 1.5% of the market in the first 10 months of 2013, down from 8% in 1991. Meanwhile, full-size pickups accounted for 12.3% of the market this year, up from 8.6% in 1991. Of the 205,128 compact/mid-size pickup truck sales during the first 10 months, Toyota (TM) - Get Report Tacoma had 66% and Nissan Frontier had 28%, according to Kelley Blue Book.
GM unveiled its 2015 Chevrolet Colorado Wednesday at the Los Angeles Auto Show, in what is widely viewed as the show's most important vehicle introduction.
Why a mid-size truck? "What a lot of people are missing is that when they look at the declining sales, they see a shrinking segment," said Tony Johnson, Colorado marketing manager. "But the buyers are still there. They just don't have a valid entry. The segment has two vehicles, and it's been 10 years since (either) had a significant refresh. Why would a customer go to this segment?"
A smaller pickup truck is a good fit for the LA show, the key auto show in the state where 10% of all U.S. vehicles are bought and where small is almost always better. According to Polk, 30.5% of all vehicles bought in the LA market are small cars, compared with 22% in the rest of the country. Also, 6.6% of vehicles purchased in LA are trucks, compared with 13.7% in the rest of the country, Polk research shows. Might a small truck get some momentum?
"LA is a huge market where there are more mid-size trucks sold in any state except for Texas," Johnson said. And Chevrolet is already gaining share in California, where its retail sales are up 21% this year.
Johnson said GM surveyed customers around the country about the potential return of the Colorado, which was discontinued in the U.S. after 2012, while continuing to be sold in 16 foreign markets. "We went out and talked to customers," he said. "We wanted to make sure there would be a customer for it. We found it is a myth that people buy mid-size pickups only because they can't afford full-size. Household income is the same (for buyers of both). But full-size is too big. Its capability is way more than (some buyers) will ever use.
"They are more urban, less rural. They need a smaller truck, something they can park and that can go in and out of traffic. But they do require some functionality. The mid-size guy is more of a commuter, but he gets use out of the truck on the weekend for camping, mountain biking, going to the beach. He has been (buying) mid-size crossovers and cars, but he can't throw things in back like with a truck."
The 2015 Colorado will go on sale in the fall of 2014. It will be built at GM's plant in Wentzville, Mo., which employs about 2,000 people. GM said this summer it will invest $133 million to add a third stamping press at Wentzville, already the home of the Chevrolet Express and GMC Savana vans, so that it can build the Colorado as well as the similar GMC Canyon. The press will increase the plant's capacity to stamp fenders, doors and other components for the new pickups and vans.
Johnson listed three key elements in GM's design of the new Colorado. First, it still offers traditional pickup capabilities for towing because "at the end of the day it has to be a truck." Secondly, it has an innovative cargo management system, including bars that can be easily fitted into various locations in the pickup bed to ease the placement of mountain bikes or kayaks or other loads. And thirdly, the cab offers both comfort, with bucket seats, as well as technology that includes Bluetooth and Chevrolet MyLink entertainment.
Caldwell said GM is probably making a smart bet on the Colorado. "There are not a lot of automakers in the space right now, and it could be a niche that gets more popular," Caldwell said. "Full-size trucks are bigger now and really expensive, and there's a need for something for people who want something smaller.
"Auto sales are going to be up to 15 million or 16 million (annually) for the foreseeable future," she said. "That means there's more opportunity to sell more diverse products."
Written by Ted Reed in Charlotte, N.C.
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