Can Nissan's New Titan XD Pickup Compete Against Ford?

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NissanNissan CEO Carlos Ghosn reveals the 2016 Titan XD pickup. It hits U.S. dealers late in 2015.
When Nissan (NSANY) has unveiled its 2016 Titan XD this month in Detroit, it said it's set to "shake up the highly competitive full-size pickup segment."

That's a tall order. The first Titan, introduced back in 2003, has never managed to make much headway against the Detroit stalwarts that dominate full-size pickup sales in North America. Does this new version stand a chance?

A New Truck That Doesn't Quite Line Up With Detroit's Mainstays

Originally, there was never going to be a second-generation Titan -- at least, not one that was engineered by Nissan. The old plan called for Nissan to sell a rebadged version of Fiat Chrysler's (FCAU) Ram. But that plan was shelved before the Ram-Titan's planned 2011 debut, sending Nissan back to the drawing board.

This new truck is the result. It looks the part -- in fact, it seems almost as if Nissan's stylists cut-and-pasted bits from recent Detroit pickups to make their own. It's brawny, with F-150-ish headlights and Silverado-ish creases on its flanks.

But the XD version that Nissan showed in Detroit is a little different from the Detroit mainstays. Unlike the Detroit trucks, all three of which come in separate and distinct light-duty and heavy-duty versions, the XD attempts to straddle that divide.

Nissan says that the XD will offer heavy-duty-ish towing capacity, "more than 12,000 pounds," and a payload capacity of 2,000 pounds, with "the fuel efficiency and affordability of a [light-duty] pickup." It'll be available with an in-between sort of engine, too, a new 5.0-liter V8 turbo diesel from Cummins (CMI), as well as a selection of V6 and V8 gasoline engines.

In other words, the Titan XD is what industry insiders call a "white space" product, a product that is aiming at a space between existing competitors. Nissan is gambling that some buyers will like having the heavier towing capacity and diesel engine in a truck that isn't quite as big and heavy as a Ford (F) F-250 Super Duty and the other heavy-duty Detroit models.

Will it work?

Nissan's Pickup Sales Have Nowhere to Go but Up

At least on paper, the market opportunity here is too huge for a growth-minded company like Nissan to ignore. Ford's segment-leading F-Series line is the best-selling vehicle of any kind in America and has been for decades; General Motors' (GM) Chevy Silverado is second.

The sales numbers for the Detroit trucks are enormous. Ford sold almost 754,000 F-Series pickups in the U.S. last year. But in comparison, the Titan was practically invisible: Just 12,527 were sold in 2014. It wouldn't take much to improve on those numbers -- and that makes the Titan XD an intriguing (and understandable) bet: Even a few thousand added sales would represent progress.

Nissan isn't alone. Its Japanese rivals Toyota (TM) and Honda (HMC) haven't been able to make much headway in pickups, either. Toyota even went so far as to build a factory in Texas (!) to make its full-size Tundra pickup, but sales have never come close to those of Ford, GM or Fiat Chrysler's Ram.

This Is One Market Segment Where Japan May Never Catch Detroit

It's not like the Japanese companies don't know how to build a truck. Toyota's small Hilux pickup is a huge seller in other parts of the world, and its midsize Tacoma pickup leads that segment here in the U.S. And the original Titan was well-regarded when it first debuted -- but it fell behind as the Detroit automakers spent big to improve their pickups over time.

That's the key. The huge sales volumes (and the huge profits) that Ford, GM and Fiat Chrysler make with their pickups mean that they can make massive investments in their truck programs. All three also have huge bases of commercial and industrial customers that they work with to improve their pickups and develop new gotta-have features.

That makes it unlikely that the Japanese full-size pickups will ever catch up to Detroit's massive sales numbers. But even if Nissan's new Titan XD turns out to be not much more than a niche product, that could still represent progress in America's biggest and toughest market segment.

Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.
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