This Article talks about how the "Big Three" (Chrysler, Ford, and GM) automakers in Detroit are looking to get back into the small pickup truck market after abandoning it in the U.S. due to weak demand. Rising fuel prices have convinced the Big Three to consider reentering the small pickup market with its own fleet of smaller, more fuel efficient trucks. Toyota is the current market leader in the small pick up market with its Tacoma. The Big Three hope to regain their share of the market with these new smaller trucks. In addition to better fuel economy, The Big Three hope to appeal to "price sensitive, younger buyers" who will then hopefully turn away from rival auto dealers and build up consumer loyalty. The downside to these smaller pick ups is they do not make as big a profit as the full size trucks do.
"Barclays Capital estimates auto companies earn between $7,000 and $10,000 on each full-size pickup because they command higher prices in dealer showrooms, while midsize trucks bring closer to $3,000 to $4,000 a vehicle."
Do you think these small trucks are a good idea for the Big Three? Do you think consumers will go for these smaller trucks instead of a full size pick up or a different type of car all together?
I think its definitely a good idea! But I would look at this in a more demographic framework for my reasoning. Increasingly, less and less people live in rural areas in America. Today, we see our population moving to cities, as commerce and social-hubs attract businesses/entertainment/and purely commercial companies alike. The farming/rural sector has a deep economies of scale. Farm sizes have gotten much smaller in the past 50 years alone. This means less people are needed in the fields, and more flock to cities seeking a better life.
ReplyDeleteTrucks play a huge role in this. Whenever I see a massive truck parked at an apartment complex, I say to myself "...Whyy? Why on earth did they buy that" There is simply no need for a Diesel, smoke-stacked behemoth when the biggest purchase you'll make in the next few years, is that bunk-bed from Ikea.
Looking at this from a demographic standpoint leads me to believe it is a very good idea on behalf of the Big Three. Aside from Fuel prices, too many people are trading in their overalls for button-downs as it is in this day-and-age.
Smaller and efficient. Some people like big trucks and some people like small ones. But the key is gas efficiency. With gas prices rising, people want more MPG and if a smaller truck gives that efficient work load, then demand will be high for it. With price not being an issue, I think this is a great idea for the Big 3.
ReplyDeleteI agree with Brandon and Andrew. I see a market for these trucks due to their lower prices,the better gas mileage, and their usefulness as a truck. They will get around better in cities and may really tap into a market demand. The only problem I can see with small trucks is the fact that they tend to be inconvenient for families (since they usually only seat 3). But if the ad campaigns and companies can spark interest in enough of the right target customers then they should be successful. I am curious to see where this goes since I know a lot of people who may buy into this product.
ReplyDeleteOne has to keep in mind that GM has to make a careful analysis in order to come back to the United States market. On one hand, as Fred Diaz observed: "the market is small. It is very small. So you have to be careful when you explore the opportunity to get back. In this sense, it is not enough to say: "one thing we do know, we want a vehicle that has high miles per gallon to help us with our [corporate average fuel] economy needs." The companies should take decision under the percept of the cost-benefit. On the other hand, the companies should take into account the idea of the competitive advantage. Maybe, GM has good ideas and mechanisms to produce small trucks or not, but one should be also realistic in order to avoid damage to people.
ReplyDeletePersonally, I would not buy from this market because of safety reasons. These cars aren't as safe as larger trucks/cars. But, like Abby said, I see a potential market for these trucks (even though it may be small now). Re-adding this market could be good for the Big 3. Of course, with this comes even more competition. I don't see all companies in the Big 3 re-adopting this small pickup truck market and all "winning." With a smaller market, I don't think consumers will buy a range of these cars from these companies. Rather, I see one company dominating with this market.
ReplyDeleteI've never been a truck person, and I really don't see the demand for smaller trucks. From my experience, many people who have trucks want huge trucks as some symbol of power or ego. I don't see the point behind getting a smaller version of this when you can just get a car that will be cheaper and more fuel efficient. I may be looking at this from more of a practical perspective than a looks perspective, but I still don't see enough demand to constitute the big three mass producing these smaller trucks.
ReplyDelete"The auto makers hope to attract price-sensitive younger buyers away from rivals and build brand loyalty." I think its appropriate time for them to bring such model in the market which is cheap and efficient, if they are looking forward to build brand loyalty. Even though the market is small, if they could build the brand value then they should be able to stay in the market.
ReplyDeleteI agree with Brandon. Many people who want trucks, back away because of the miles per gallon. Smaller trucks will appeal to their target market because they would have better MPG and still give you the perks of a biger truck, with a little less space. The only downside i see is that the businesses that need the space of the bigger trucks would stear away from these smaller trucks but based on this article it doesnt sound like that market is who their trying to appeal to.
ReplyDeleteI agree that many people backa way from trucks because of the MPG but if they have the better MPG and still the truck feel, people will still be interested. I do think that some people will still prefer the larger trucks.
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