Global Insight Perspective | |
Significance | General Motors has announced an indefinite halt to the programme to redesign its GMT900 family of full-size trucks and sport utility vehicles, in response to the mass migration away from big trucks to smaller, more fuel-efficient transportation. |
Implications | GM will update its models with new interiors and powertrains, but a full-on redesign of the platform is not in the pipeline. The company will instead reassign engineers and cash towards the development of more fuel-efficient car models. |
Outlook | The big, full-size SUV is not dead, and its future is likely to look very similar to the models currently on sale—only in much more limited quantities, aimed at buyers who simply cannot fulfil their usage needs with anything else. GM is likely to shift the smaller of the full-size trucks to more fuel-efficient platforms similar to the Lambda crossovers it currently sells. |
General Motors (GM) announced yesterday that it was delaying the redesign of its GMT900 platform-based pick-ups and sport utility vehicles (SUVs) indefinitely. The next-generation full-size trucks and SUVs were expected to enter production in 2011, according to information published with the latest United Auto Workers (UAW) union contract, but now the new trucks are not expected to appear until 2012 or 2013. "We're not giving up on the full-size truck market", said GM spokesperson Tom Wilkinson. "We have every intention of leading it in the future, even if it's a smaller sized market than it is today." The move comes as sales of big trucks and SUVs have fallen precipitously, by over 24% for SUVs alone during the first five months of 2008. The engineers working on the truck programmes will be reassigned to other projects at GM, which will instead focus on accelerating its more fuel-efficient passenger car line-up.
"This is hugely significant", says Global Insight's Rebecca Lindland. "This is a clear sign they [GM] are re-evaluating everything, because this has been the core of their bottom line for years." The full-size SUVs are being evaluated under the code GMT10XX, according to GM spokesperson Tom Pyden. "We're going to leave all of our options open, but this is a direct result of the market conditions we are facing', Pyden said. A confluence of economic headwinds, including fuel at US$4.00 per gallon and a housing crunch that has seen both new construction and personal financial liquidity dry up, has harmed sales of big trucks across the board at all automakers.
Outlook and Implications
It is safe to say that the point at which the old model of the U.S. auto industry ended and a new one has begun has now officially arrived. The shift began with the passage of 40% higher corporate average fuel economy (CAFE) requirements for 2020, and it has now progressed to the point that the leading U.S. automaker has announced that it is seriously rethinking what it wants to do with its full-size truck platform. Simply put, the next-generation big trucks from GM (and likely all the leading automakers in the United States) will look significantly different to those seen today. At least, this will be true for the volume-leading segments. Healthy sales of GM's big Lambda-platform SUVs (the Saturn Outlook, GMC Acadia, Buick Enclave, and soon-to-arrive Chevrolet Traverse) have proven that American consumers’ appetite for big vehicles has not disappeared; it has simply become more sensible. If GM can satisfy the majority of those wanting to buy SUVs with vehicles based on uni-body, front-wheel-drive (4WD), lighter, and more efficient platforms, then it simply does not make sense to continue to make the big body-on-frame designs in large volumes. Given the speculation that Ford is developing a new kind of smaller, more efficient, yet still full-sized pick-up that is likely to use the company's EcoBoost engine technology for delivery around 2011 (rumoured to be called the F100), added to the uncertainty still surrounding the CAFE requirements, GM likely decided that it would be more prudent to wait and see what form its new big trucks should take before soldiering on with development. In the meantime, this allows GM to shift its engineering and cash towards more fuel-efficient, car-based programmes.
Even if the majority of users can make do with large uni-body SUVs, this does not spell the end of the road for the big body-on-frame-style Chevrolet Suburban. Global Insight's John Wolkonowicz believes that we may see a return to what the Suburban was originally intended to be: a heavy-duty workhorse for those who needed to haul both people and tow equipment. "Suburban still has a lot of equity in the name, and there are still people out there who need that kind of big, tough V8-powered truck", he said in a conference call recently. But production of such vehicles is likely to return to the limited numbers seen 20 and 30 years ago, when they were purchased only by people who truly needed them, and not by buyers interested in the "lifestyle" such vehicles advertised. The example that offers the most similarities is Ford's continuation of the Crown Victoria sedan, an archaic, 25-year-old vehicle, over 60,000 units of which are still sold annually to police departments and taxi fleets. Such may be the fate of the big, traditional trucks.
In fact, it would not be at all surprising if the next-generation full-size Suburban is practically identical to the current-generation model. If GM can keep the same platform for the next-generation model, but refine and improve powertrains and fuel efficiency, it would prevent the need for a massive, multi-million-dollar programme for re-engineering and re-tooling the vehicle when demand is likely to be quite limited further down the road. Instead, GM would likely take SUVs such as the Tahoe and Yukon, shorter-length full-size SUVs, and switch them to larger uni-body platforms, perhaps even expanded versions of the popular Lambda platform. The question should not be what will the next big trucks look like, as they are unlikely to look all that different from the offerings on sale now in terms of their under-the-skin construction; instead, the real question should be what will replace those trucks in American consumers' garages, as the usage and demands of consumers remain now the same as before, but with the added requirement of significantly better fuel economy. As the entire industry rethinks what exactly big trucks should be and how they will be used, significant changes are likely as to where investments are made.