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New Pickups Should Fuel Automakers’ Growth

Posted By RVBusiness On March 21, 2013 @ 9:37 am In Breaking News | No Comments

Ford F-150 XL

General Motors and Ford Motor Co. should see significant profit growth and gain market share in the next couple years in North America, largely fueled by new large pickups hitting the U.S. market.

The Detroit Free Press reported that GM’s new trucks are preparing to roll out this year and the expectation is Ford replaces the F-150 next year. Large pickups represent the primary tow vehicle for the RV industry.

The two domestic automakers are forecast to outperform the industry and pickups will account for the majority of volume gains until 2015, Itay Michaeli of Citi Research said Wednesday during a call with investors.

Citi expects large pickups to grow from 11.3% of the U.S. market in 2012 to 12.8% in 2015 when the total market is expected to hit 16 million sales and pickup sales will account for 2.4 million of them.

While the current average age of cars on the road is about 11 years old, the truck fleet is two years older.

GM has 41% of the trucks on the road and has the highest segment loyalty, all of which adds up to a strong potential pool of buyers for the new trucks preparing to hit the market. For GM, pickups will account for 27% of the mix by 2015 with about 944,000 sold that year. Ford is projected to sell about 920,000 pickups in 2015, representing 32% of their mix.

It’s good business. Profit margins on trucks are double that of small cars. Michaeli said GM could see a $1.1 billion earnings bump from pickups and Ford could expect $400 million once its new trucks hit the road. Before that, Ford could see some negative pricing as it improves incentives to compete with GM’s new pickups.

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