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Offbeat GM's Next Battle With Ford: Really Big Pickups

14:06  17 may  2018
14:06  17 may  2018 Source:   online.wsj.com

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The business of big work trucks is bigger than ever, opening up a new front in the market-share battle between GM and Ford , which dominate the production of A strong economy and the December tax overhaul are helping lift sales of commercial vehicles, mainly pickup trucks and delivery vans used by

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a truck is parked on the side of a building © Chevrolet The business of big trucks is bigger than ever, opening up a new front in the market-share battle between General Motors Co. and Ford Motor Co., which dominate the production of these multitasking pickups.

A strong economy and the December tax overhaul are helping lift sales of commercial vehicles, mainly pickup trucks and delivery vans used by general contractors, farmers and other skilled trades, auto dealers say. While Ford has for years had a sizable lead in the battle for business customers, with its F-Series pickup, GM later this year plans to reintroduce a so-called medium-duty commercial truck, a category the auto giant abandoned around the time of its 2009 bankruptcy.

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The beefy new Chevrolet Silverados will be built under an agreement with truck maker Navistar International Corp. at a plant in Springfield, Ohio. The trucks are as much as three times as heavy as a regular Silverado, and users convert them into everything from dump trucks to ambulances.

GM’s return to the segment reflects Detroit’s sharper focus on trucks and sport-utility vehicles as demand for passenger cars recedes. GM, Ford and Fiat Chrysler Automobiles NV are adding new truck models in a bid to boost profits. Big pickup trucks and the SUVs that share the same frames generate both the majority of global profit at the companies and offer fatter profit margins than cars, analysts estimate.

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Ed Peper, head of GM’s fleet business, believes the return of the medium-duty Silverado truck to GM’s lineup will bring back business customers who defected to Ford. “We’ve been losing customers because we don’t have this,” Mr. Peper said.

John Ruppert, general manager of Ford’s commercial sales, is confident Ford can protect its medium-duty business because it has strong relationships with business customers and the companies that convert the trucks for specific use.

Ford and GM are going after customers like Fred Hollmann, owner of a landscaping company near Cincinnati. Mr. Hollmann said he plans to buy several pickup trucks through next year to update his fleet of about 50 vehicles. Business is strong, and his lower taxes have improved cash flow, he said, while provisions in the tax law allow business owners to fully write down the depreciation of a heavy truck the same year it was purchased, an incentive Mr. Hollmann said he plans to utilize.

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When General Motors Co ( GM .N) engineers were developing the 2019 Chevrolet Silverado and GMC Sierra pickup trucks, some of them joined public tours of Ford Motor Co' s (F.N) Dearborn, Michigan factory to watch aluminum-bodied F-series trucks go down the assembly line.

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“We’ve got several trucks that have just gone by the wayside and need to be replaced,” Mr. Hollmann said.

The medium-duty truck segment is relatively small—there were about 150,000 sold last year, according to Columbus, Ind.-based ACT Research Co. But buyers tend to be big spenders and typically purchase many types of vehicles from the same auto maker, said Steve Tam, an ACT vice president. Medium-duty trucks, which are more customizable than other types of trucks, can go for more than $60,000, plus hefty conversion costs.

Ford is the segment’s major player, with about 45% market share, according to ACT. But GM will face other competitors too, including Fiat Chrysler’s Ram division, Daimler AG’s Freightliner brand and Isuzu Motors Ltd., which have been adding features to make the trucks more capable and easier to use.

Ring’s End, a Connecticut lumber supplier for high-end homes, switched to Ford for medium-duty trucks when GM left the market, said Scott Herling, a sales manager. The company “is excited to have another option,” he said.

GM’s overall commercial business suffered after bankruptcy, which scared away some customers. GM’s sales to business customers plummeted to about 165,000 vehicles in 2012, down by nearly half from 2006.

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The medium-duty Silverados will be the biggest vehicles GM sells, though it will leverage other parts of its truck business. For example, the cabin—typically no frills—will be similar to the interior of a regular Silverado, with creature comforts like Wi-Fi and Apple Car Play.

Keith McCluskey, a Cincinnati Chevrolet dealer, was a major medium-duty truck seller before GM killed the line. He has already fielded calls from customers eager to check out the new one, but he believes winning back business from Ford will be tough.

“I don’t think it’ll be easy just to turn it back on,” he said.

Write to Mike Colias at Mike.Colias@wsj.com

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