Did GM Just Crush Ford's Pickup Advantage?
General Motors said on Monday that its all-new Chevy Silverado and GMC Sierra full-sized pickups will have the most fuel-efficient V-8 engines in their market segment - so efficient that they would even beat Ford's much-touted "EcoBoost" V6 truck engines.
The difference is a tiny one, just one mile per gallon in the EPA's highway ratings. It's unlikely to mean a whole lot in real-world driving. But while the difference may be tiny, consider this: GM didn't just send out a press release, they held a full-blown press conference to tout the new trucks' advantage.
Is this just mere Detroit trash talk? No. The truth is, the pickup wars are very serious business for both GM and Ford, and little distinctions like this one can mean a lot.
Why pickups are a huge deal for both GM and Ford
Why are pickups such a big deal? Because they're a huge source of profits. Ford's F-Series and GM's Chevy Silverado aren't just the best-selling pickups, they're the No. 1 and No. 2 best-selling vehicles in America, period, handily outselling cars like Toyota's super-popular Camry month after month.
Consider this for context: Tesla Motors has made a big impact with its goal of selling 20,000 of its all-electric Model S sedans in 2013. But Ford sold over 54,000 F-Series pickups just in February -- and while that was a decent month for the Blue Oval, it wasn't a remarkable one. GM's total sales of its two pickups, the Silverado and the Sierra, were in the same ballpark.
Long story short, full-sized pickups sell in huge numbers here in the U.S. And they're high-margin products, especially when they're "optioned up" with luxury-car-type features or heavy-duty add-ons, as many are nowadays. That adds up to an enormous impact on the bottom line: One top analyst recently estimated that as much as 90% of Ford's global profit comes from the F-Series.
The impact at GM is likely somewhat less, but it's still huge.
Why small differences in cost can be a big deal
So why did GM make such a big deal out of its one-MPG victory? Because it might mean a lot of sales. Unlike cars, the vast majority of which are bought by individual consumers, many pickups are purchased by business buyers. Those buyers range from giant utility companies down to tiny three-man contracting firms, but as a general rule, they're very sensitive to new truck pricing and to cost of ownership differences.
That sensitivity is why Ford has advertised its EcoBoost drivetrain so heavily over the last year, and it's why GM made a big deal out of a tiny MPG advantage on Monday. It's an advantage that probably seems trivial to most individual consumers, but to a commercial fleet manager, it might swing an order to Chevrolet that might otherwise go to Ford.
Might, that is, unless Ford responds, which it surely will. Stay tuned.
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The article Did GM Just Crush Ford's Pickup Advantage? originally appeared on Fool.com.Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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