DETROIT (Reuters) - General Motors Co (GM.N) on Thursday unveiled a revamped luxury pickup truck, intensifying the battle among Detroit’s Big Three automakers for fat profits at the top end of a highly lucrative segment even as overall U.S. new vehicle sales decline. That battle will be fought in truck-heavy states like Texas, where consumers aspire to luxury pickup trucks more than luxury car brands such as Daimler AG’s (DAIGn.DE) Mercedes-Benz and BMW (BMWG.DE).
“The whole (luxury truck) segment is going to be exceptionally competitive for at least the next 24 months, because Ford and Fiat Chrysler will not take this lying down,” IHS Markit auto analyst Tom Libby said of GM unit GMC’s new Sierra Denali.
Detroit’s automakers dominate the U.S. pickup truck market.
“There has been some softness in the (overall) market, but the market for these trucks is still very strong,” GM’s global product development chief Mark Reuss said at the event on Thursday.
Unlike some past GMC vehicles, the new 2019 Sierra Denali pickup, a premium version of the standard Sierra, has been designed from scratch. GMC has been criticized previously for simply selling glorified Chevrolet models at higher prices, a common industry practice.
The new Sierra Denali — GMC uses the Denali sub-brand on luxury trucks, SUVs and crossovers — has striking lines and features including a high-tech tailgate that opens six different ways.
The new Denali also features leather seats with heating and cooling functions, and a new infotainment system with a smartphone-like display screen. The pickup also has added leg-room in the back and luxury wood trimmings, though GM executives say the pickup has lost none of its functions as a heavy-duty work vehicle.
According to Kelley Blue Book (KBB), the average transaction price in 2017 for all GMC Sierra models was $49,615. For Ford Motor Co’s (F.N) F-Series trucks, it was $49,439, and a Fiat Chrysler Automobile NV (FCA) (FCHA.MI) Ram pickup averaged $46,789.
Those averages include far-cheaper models, but are still higher than the average for luxury sedans like the BMW 3 Series, Audi's (NSUG.DE) A4 and Toyota Motor Corp's (7203.T) Lexus ES. For a graphic, see tmsnrt.rs/2F11cR9
Last month GM unveiled a revamped Chevrolet Silverado truck and forecast higher profits in 2019 thanks to its new high-margin pickup trucks.
The F-series has been the best-selling model line for 41 years, with 2017 sales of nearly 900,000 vehicles. GM sold a total of 947,972 of its four Chevrolet and GMC pickup models, two of which are mid-sized.
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Around a third of Ford’s F-Series pickup trucks count as premium, meaning around 12 percent of Ford’s 2017 total U.S. sales were luxury trucks. Luxury models make up about 30 percent of FCA’s pickup truck sales.
Pickup prices range from around $25,000 to as much as $100,000. Industry analysts estimate gross margins for some top-of-the-line trucks can exceed $50,000.
Margins matter more in a declining market.
U.S. new vehicle sales fell more than 2 percent in 2017 - and should drop further in 2018 as interest rates rise and more late-model used cars return to dealer lots to compete with new ones.
Passenger car sales declined 11 percent last year. But SUVs, crossovers and pickup trucks rose 4.3 percent.
1. Outline the problem
2. List the competitors and their positions in the marketplace
3. Explain which competitor has the upper-hand in this battle
4. Describe how the above is a classic case of competition
5. Outline the outcome of the battle above (your prediction)
P.s can you try to explain it in a short and concise way