End of the Road for Honda's Ridgeline?
Some of the most profitable vehicles made over the last two decades are pickup trucks, with analysts saying that the $40,000 and up full-sized pickup truck is also the most profitable non-luxury vehicle sold by Detroit. But Honda , with a single light-duty truck model on the market, hasn't found the same traction as its domestic rivals.
Ford has sold 623,309 F-Series pickups so far in 2013, 20% more than it sold at the same point last year, representing a rate of some 60,000 trucks per month. At least one analyst estimates that Ford generates as much as 90% of its global automotive profits from its F-Series alone. Similarly, General Motors' own profits hit a two-year high this past quarter on the strength of sales from its Chevy Silverado that's allowed it to increase pricing by some $400 million. Indeed, GM's average transaction price in the third quarter rose 3% sequentially as truck buyers have proved willing to pay nearly 7% more for the vehicles.
Honda, however, hasn't been so fortunate. Through October the automaker has sold only 14,807 Ridgelines -- just about what Ford sells in a single week -- which explains why there's speculation the 2014 model may be the its last production run. According to Wards Auto, the compact pickup is taking a two-year leave of absence, a big change from the original rumor it would run through early 2016 and then see a new generation of truck emerge in 2017.
Of course, rumors about Honda's only truck have prematurely killed it off before. In 2010, after saying there would be a 2011 model but not announcing anything beyond that, industry experts suggested that it had reached the end of the road. The same thing happened the following year as well.
The truck was introduced in the U.S. in 2005 as an '06 model, and peaked the following year at more than 50,000 units sold. But sales went into a tailspin soon thereafter, and by 2012 had fallen below 10,000 units. While Ridgeline sales rebounded sharply last year and are up another 32% so far this year, it's apparent that it won't return to its glory days.
When the Ridgeline was introduced, it offered some innovative features, such as a unibody design commonly seen on models like Honda's Pilot, but unique to the traditional body-on-frame construction found in trucks. It also had a car-like independent rear suspension and a "dual-mode" tailgate allowing it to drop down like a pickup truck or swing out to the side like an SUV. It was definitely a different animal than GM's Chevy Colorado or Ford's Ranger, models that were subsequently killed off here in the U.S.
While some of the design components like the in-bed storage compartment were adopted by others in the industry -- Chrysler now offers storage in the bed of its Ram pickup, for instance -- the blending of a pickup truck's utility with a car's practicality was only really appreciated by industry enthusiasts. After the initial rush of buying and the onset of the financial crisis, the car-buying public lost its ardor for the design, which is why we keep hearing about its impending death year after year.
Even if this is another dead end on the death-watch road for the truck, a complete overhaul of its design for something that hasn't been all that popular could be costly for Honda. Toyota has become the third-largest light pickup truck sales leader, with its Tundra and Tacoma models selling 22,264 units combined in October, but perhaps Honda sees an opening for another light-duty truck. Detroit dominates the big pickup trucks, but the Tacoma is the top mid-size truck in the U.S.
Pickup trucks are one of the biggest profit drivers for vehicle makers these days, and Honda undoubtedly wants a share of the pie. Resurrecting the truck with a new design that will fatten Honda's bottom line is a road it needs to travel on.
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The article End of the Road for Honda's Ridgeline? originally appeared on Fool.com.Fool contributor Rich Duprey has no position in any stocks mentioned. 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. 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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