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For more than a decade the smart money said Toyota Motor (TM) and other Asian automakers would win over the outdoor-loving drivers of big pickups made by General Motors and Ford Motor (F) and wrest control of that profitable U.S. market segment just as they had with cars. It never happened. The Japanese makers instead lured truck buyers who resemble car owners rather than die-hard truck lovers. Now sales of large pickups such as GM's Chevrolet Silverado and Ford's F-150 are rebounding, and Toyota and Nissan Motor's failure to attract the truly devoted pickup buyers means less cash in their coffers.
"The Big Three successfully beat back the Toyota incursion into the pickup market," says Brian Johnson, a Barclays (BCS) auto analyst who in 2007 predicted the Japanese company's success. "We had expected Toyota would do what they did with cars and take over the market. Their share gains have been frustratingly slow."
One reason: Toyota's full-size Tundra, which starts at $23,455, attracts a different type of buyer, data from Nielsen Claritas show. Toyota truck owners are 38 percent more likely to fly on business than typical drivers, and they lean toward hobbies like backpacking and mountain biking. Buyers of big pickups from GM, Ford, and Chrysler, however, are more likely to own a rifle to hunt than a bike to ride. Because that group of traditional truck buyers is so much larger, the Big Three has retained more than 90 percent of large pickup sales. It's a particularly lucrative win: Pickup profits range from $9,000 to $13,000 per vehicle, vs. $5,000 per car, Johnson said.
Sales for large pickups (weighing above 6,000 pounds) in the U.S. hit 2.2 million in 2007, only to plunge to 1.1 million last year—a 17-year low. Researcher IHS Automotive (IHS) forecasts they'll surge 18 percent this year and hit 2 million again by 2016. Japanese automakers' market share will average only about 8.6 percent over that span, IHS predicts.
The cool response that Toyota—the world's largest auto company and America's largest producer of cars—has received to its big pickups has sent market researchers sifting through sales data for demographic and psychographic clues to the causes of its disappointing performance. They found that GM and Ford truck owners, for instance, are more likely to dine at Cracker Barrel (CBRL) restaurants, have dial-up Internet, and use the paper Yellow Pages, according to purchase data from Nielsen Claritas. A much higher share of buyers of Toyota's big pickup dine at steakhouses, shop online, own golf clubs, and subscribe to magazines like Runner's World, the Nielsen data show. "Toyota planned for a [truck] market that really didn't exist," says Alan L. Baum, an auto analyst at Baum & Associates. "They just didn't hit a chord with buyers. It was almost comical."
While Toyota never expected to unseat either GM or Ford in full-size truck sales, even its goal of about 200,000, called "modest" in 2007 by then-U.S. chief Jim Press, has so far proved beyond its reach. Toyota initially planned for a capacity of as many as 325,000 Tundras. Similarly, Nissan said it hoped to sell at least 100,000 units of its full-size Titan truck when it entered the market in late 2003. Like Toyota, which has its pickup plant in San Antonio, Nissan built a $1.4 billion factory in Canton, Miss., to make the Titan. The company said the plant could shift to make even more of the trucks if demand exceeded its 100,000-unit goal.
Neither Japanese maker had to worry about maxing out its plant. Toyota's highest sales level was 196,555 Tundras in 2007, before output withered to 79,385 units in 2009. Nissan peaked at 86,945 Titans in 2005, dropping to just 19,042 last year. "Ultimately the group we were targeting wasn't quite as big as we expected," says Larry Dominique, Nissan's vice-president for North American product planning.
By contrast, GM has sold an average of 825,007 large pickups annually over the past decade, including the Chevy Silverado and Avalanche models and the GMC Sierra. Ford's F-Series models averaged 724,478, and Dodge Ram models averaged 339,448, according to IHS. Explains Tony Truelove, marketing manager for the Chevrolet Silverado: "This is as red, white, and blue a market as there is."
The bottom line: Despite commanding America's passenger car market, Japan's Toyota has failed to attract traditional truck buyers to its large pickups.