General Motors
General Motors' $6 billion truck
May 10, 2013: 12:13 PM ETThe Silverado pickup has been in the works for seven long years. It could deliver up to $6 billion in profit -- a year.
By Doron Levin
FORTUNE -- For General Motors Co., every new vehicle model consumes gobs of capital and must return a profit. But GM's new Silverado pickup truck is in a league of its own. It is the single-most consequential vehicle in GM's financial turnaround.
Seven years in development, the Silverado sports bold styling, a raft of new features such as a MyLink infotainment package, and three engine options that offer more fuel-efficient technology than previous versions.
GM (GM) is blessed with great timing, as demand for pickups is rising, stimulated by a revived U.S. housing market, economic growth, and a raft of buffed new models. Indeed, the market is crowded with strong competitors: Ford's (F) F Series and Chrysler's Ram pickup are estimable and just as consequential to those automakers' futures.
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GM chose Texas for the first public drives and tests of the 2014 model, a state where about one of every six of full-size pickups in the U.S. are sold, according to the automaker. GM staged the event at a private ranch near San Antonio, to underscore its rural connection and perhaps to remind Toyota (TM) that the 2006 construction of its $1.2 billion Tundra pickup plant in that Texas city hasn't quite lived up to expectations.
"Truck buyers are the most loyal of all," said Maria Rohrer, Silverado marketing director. For most buyers the connection to their pickups is one of blood. "They keep coming back because their fathers and grandfathers drove a Chevy pickup." The same applies to Ford and to Chrysler's Ram. A bit more than half the buyers of new Silverados will trade in a Chevy truck, she said.
Trucks are key to life on family ranches, farms, and small businesses in the midsection of the country. In fact, pickups may be fairly regarded as more or less Republican vehicles, their sales concentrated within the boundaries of the red-state electoral map. This fact was not lost on the bipartisan consensus to help GM after its financial collapse in 2008-2009.
Yet pickup trucks, despite their rural roots, have become less and less purely utilitarian and increasingly available with the same creature comforts as luxury sedans. The least-expensive Silverado, which begins arriving at dealers in the next month or so, will start at about $23,000, a relatively spartan affair with a two-seat cabin. Only 15% of buyers will choose this model.
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GM said more than 60% of the buyers will pay over $40,000 for their pickups. Silverado has two cabin configurations that include second rows, enough room for a double date to the county fair or a Sunday morning jaunt to church with the kids.
Because Japanese automakers have managed to conquer only a small piece of the U.S. full-size pickup market, U.S. producers can contend among themselves for most of the shoppers now "in play," those who aren't currently driving a Silverado or F Series. And since large pickups are sold only in North America, automakers have the unusual luxury of charging prices that haven't been driven lower, as with most models, by global competition.
Joe Phillippi, a former Wall Street automotive analyst who writes about the industry, reckons that Silverado will earn "at least five figures" in gross profit per sale. Thus it and its sibling, the GMC Sierra, could account for $5.5 billion to $6 billion in gross profit annually for GM.
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Pickup trucks are back!
Suddenly, the one-time profit engines for the Detroit 3 are firing on all cylinders again.
By Doron Levin
FORTUNE -- April, a cruel month for poets, turned out to be one of joy and relief for Detroit automakers due to the rebounding sales of large pickup trucks, a key moneymaking category for the U.S. industry.
Sales of the Ram, Chevrolet Silverado, Ford F-150, and their peer group, were up almost 27% from MORE
May 7, 2013 10:36 AM ETPosted in: Chevrolet Silverado, Chrysler, Ford, Ford F-Series, General Motors, GMC Sierra, pickups, Ram trucks -
How VW is beating the slump in Europe
The German giant is still gunning to be number one in the world. The slowdown at home doesn't seem to be stopping it.
By Doron Levin
FORTUNE -- The Volkswagen AG juggernaut, which posted an uncharacteristic profit decline this week for its first quarter, won't be slowed by a weak European economy that has hurt auto sales.
To the contrary, the European slump may be hurting its weaker competitors more. Paradoxically, a MORE
May 1, 2013 8:48 AM ET -
Does Jeep have a design problem?
Yes. Jeep needs to grow its brand without turning off loyal customers.
By Matt Vella, senior editor
FORTUNE -- The debut of Jeep's 2014 Cherokee has been anything but ideal. Shortly, after a blog released blurry pictures of the new model rolling off the assembly line in February, the automaker rushed to confirm the design was real -- and put out crisp, press-friendly photos. But the polarizing new look didn't get MORE
Apr 2, 2013 3:06 PM ET -
Lincoln's renaissance needs a jump
Ford's relaunch of its Lincoln luxury brand isn't off to a great start.
By Doron Levin
FORTUNE -- Ford Motor Co.'s campaign to fix its floundering Lincoln luxury brand has slipped back a notch or two with the flubbed launch of its MKZ sedan, which had to be suspended due to poor quality of the vehicles.
Lincoln dealers in the U.S. were understandably irritated after the $7.4 million of MKZ advertising during MORE
Mar 29, 2013 6:57 AM ET -
Self-driving cars could solve the oil crisis
Autonomous driving technology could cut down on vehicles' weight - and therefore improve fuel efficiency.
By Doron Levin
FORTUNE -- Earlier this month, President Obama proposed spending $2 billion over the next decade to find an alternative to operating cars and trucks on oil -- an idea that has been catnip to the political class. Previous presidents and congresses have sought favor with voters by spending on gas-electric hybrids, biofuels, advanced MORE
Mar 27, 2013 11:25 AM ET -
Can General Motors remake its rental car?
GM's Chevrolet Impala - a favorite of dreary rental lots - is getting a do-or-die makeover.
By Doron Levin
FORTUNE -- That Chevrolet Impala you may have rented on your last out-of-town trip has little resemblance to the one arriving at dealer showrooms in the next few weeks. General Motors Co. has completed the overhaul of Chevrolet, its biggest-selling brand, with a new full-size sedan it hopes -- check that, prays MORE
Mar 14, 2013 12:28 PM ET -
Inside the kerfuffle over GM CEO's pay package
GM is hamstrung by its relationship with the U.S. government - but not for long.
By Doron Levin
FORTUNE -- Pity poor Dan Akerson, chairman and chief executive officer of General Motors Co.
Not only does he earn a third of what his peers in Detroit are paid to run global automobile companies, he gets beaten up by the Oversight Committee of the House of Representatives that issued the (seemingly false) report MORE
Feb 28, 2013 9:15 AM ET -
GM wants to sell Americans on diesel
A version of its new Cruze compact features something few American cars have - a diesel engine. The question is, will it sell?
By Doron Levin, contributor
FORTUNE -- General Motors Co. is attempting to bury bad memories of failed diesel cars from the 1970s and 1980s. The Detroit automaker is attempting to turn to a fresh page with the new Chevrolet Cruze Turbo Diesel.
The latest version of Chevrolet's (GM) popular MORE
Feb 11, 2013 10:18 AM ET -
Toyota wants to win in pickups
Its Tundra is being retooled to fight Ford and GM.
By Doron Levin, contributor
FORTUNE -- One of Toyota Motor Corp.'s rare miscalculations in the U.S. was in full-size pickups, a category dominated by General Motors Co., Ford Motor Co. and less so by Chrysler's Ram.
But Toyota (TM), an also-ran, isn't giving up. Exhibit A: a new-generation Tundra pickup shown on February 8 at the Chicago Auto Show. The Tundra's exterior has MORE
Feb 8, 2013 11:24 AM ET
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