Road Show

The sudden sales shortfall in June for the Big Three has less to do with the automakers' marketshare battles with imports than with the extent to which their volume for the past fifteen or so years has relied largely on truck and truck-based SUV sales from vehicles like Ford Explorer and Chevrolet Tahoe.

The sudden sales shortfall in June for the Big Three has less to do with the automakers' marketshare battles with imports than with the extent to which their volume for the past fifteen or so years has relied largely on truck and truck-based SUV sales from vehicles like Ford Explorer and Chevrolet Tahoe.

General Motors reported a 26% drop in sales last month, versus the month last year, when sales were being supported by employee discount pricing. Ford sales were off 7%, even though cars were up 10%. That's because truck sales fell 15%. DaimlerChrysler, which includes Mercedes-Benz and Chrysler Group's Dodge, Jeep and Chrysler brands, saw sales fall 13% last month.

Ford's F-series pickups have been the largest selling vehicle in the US market for years. The company has routinely post sales of close to a million for the full-sized pickup. And not just sales depend on the truck. To say Ford's brand equity relies on the F-150 is about a degree of exaggeration away from saying Harley's brand equity relies on straight pipes, chrome, and leather.

There is, of course the Mustang, on the car side, and the company has been at pains to make the redesigned 2004 version of the car the halo for its effort to rediscover its car roots. But the company hasn't had the kind of volume out of a car nameplate – and certainly hasn't eaten Toyota and Honda's lunch – since the 1980's, when the Taurus ran amok in the market. The good news for Ford is that its cars, particularly the new Fusion sedan and its variants for Mercury and Lincoln, seem to be selling briskly.

Still, at least in the near term, the full-sized pickup market will tell the tale of the tape for both automakers, and to some extent for Chrysler as well, whose Dodge Ram pickup has run at third place. General Motors' largest division is Chevrolet, and the company, just as Ford attempted in the past, has put the focus on Chevrolet as a truck AND car brand, an effort to meld "Like a Rock" with…whatever Chevrolet cars are supposed to represent. Still, Silverado and its brethren GMC Sierra sales constitute, together, as much volume as F-150, and more than anything else the company sells. And none of this includes SUVs, which really became the center of marketing efforts for both GM and Ford early in the century.

Given that gasoline prices are hurting sales of full-sized pickups – and that nobody sees that changing any time soon – and that one cannot ignore Toyota's aggressive all out effort to grow its sales of its Tundra, one must ask whether the companies can continue to enjoy even a majority of the truck volume they have in the past. Domestic truck makers do have a trump card: pickup truck buyers are traditionally both brand loyal and patriotic. Despite such sentimental reasoning for purchases, they are also, perhaps paradoxically, left-brained when it comes to product features. Truck buyers know about things like the structure of a truck's ladder frame, towing capacity, and functionality.  Ford, which has tied its truck brand to rodeo, country music, football, and, yes, Harley Davidson, also has a strong PR focus on truck features, including a physical demonstration of how its truck's ladder frame differs from the competition.

Also, the domestic truck makers have large numbers of variations of their trucks, in terms of interior choices, cab, and bed sizes. This builds volume. For its part, Chrysler has a new campaign that seems a rather flippant take on Ford's efforts a few years back to tout the brand with ads starring Bill Ford talking extemporaneously about Ford heritage, expounding on such tag lines as "Built Ford Tough." Chrysler's effort, "Ask Dr. Z," stars Chrysler Group alum and DaimlerChrysler chief Dieter Zetsche, who helped turn Chrysler around, and is now talking about how vehicles like Ram benefit from a marriage of American know-how and German technology. One might speculate on whether this could hurt Dodge's appeal to All-Americanism, which it has hammered home with ads featuring two hillbillies in a Dodge Charger, asking a Ram driver, "That thang got a Hemi?"  Zetsche is obviously German, and the gist of the message is: DaimlerChrysler is not really an American company anymore, a point that has only been made explicit once in the past with ads for the Chrysler Crossfire coupe, which explicitly targets an import-minded buyer anyway.    

That may be moot, though: Toyota is now building Tundras in Texas, ground zero for pickup truck sales in the US, and running full-bore PR and ad efforts to tout itself as an American company.  What are Ford, GM, and Chrysler to do? Obviously, the message must be on fuel economy, and that will depend on the product itself. Meanwhile, should the temptation arise at GM or Ford to hammer home a brand-loyalty or patriotic type of message, they should probably resist it. Such efforts can backfire if consumers sense it's reactive, or, God forbid, desperate. 

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