industry often conjures images of sleek
German sedans and sports cars, or on
the very high end exotics from Italy
and elsewhere. Bearing six, seven, or
even eight figure price tags.
But in recent years, a
new phenomenon has emerged.
American carmakers, which have often struggled
to compete at the higher
end of the market, have found a new
way to lure customers by cranking out
top shelf versions of what many people
would say Americans do best: T he
pickup truck. At least some auto
executives say they haven't seen anything
like it before. As the overall auto
market shifts away from sedans and
SUVs, a new type of customer is
emerging, seeking plush, tech rich and
high priced premium pickup trucks.
These vehicles boast spacious interiors
wrapped in leather and natural
wood, with cutting edge infotainment
and driver assistance features.
Trucks are stealing industry awards from
veteran luxury brands and a few
customers are even trading in their
BMWs and Mercedes-Benzes, for Fords,
Rams, and GMCs.
It is slowly reshaping what
a luxury vehicle can be.
Trucks as a category
have gotten better.
They're not a tool anymore. They're a
lot more than just going being a
tool. Pickup trucks form a relatively
small portion of the overall vehicle
market. They're not nearly as
popular as sport utility vehicles.
A few of which are
still built on truck platforms.
Pickups are also just a slightly
higher percentage of total new vehicle
sales than they were in 2007, before
auto sales tanked due to fuel spikes
and a suffering economy.
But pickup trucks matter
tremendously to Detroit automakers.
For example, about 1.2
million of the 2.3
million new vehicles sold under the
Ford brand in 2019 were trucks.
For most of their history, pickup
trucks in America have been functional
vehicles. Ford's first pickup truck, introduced
in 1917, was a variation
on its Model T sedan, but
outfitted with the heavier frame customers
wanted for loading cargo.
The Model TT was born.
From then on, trucks
were mostly functional vehicles.
For decades, pickups were commonly
just two-seaters, indicating they were
valued more for hauling stuff in the
bed than they were for ferrying
passengers in the rear seats.
But over time, extended cabs, quad cabs,
and crew cabs, styles of pickup
with four seats and often four doors,
began to form an ever larger portion
of sales. Today, a growing portion of
consumers are not seeking trucks for
use on a farm or a job
site, but as comfortable daily drivers, family
haulers, or as gear
for outdoor recreation.
Truck makers have ventured into
luxury territory in the past.
Notable examples are the Lincoln Blackwood
and the Cadillac Escalade EXT
pickup. But these vehicles were
largely before their time.
Lincoln, the luxury brand owned by Ford,
found success with its full size
Navigator sport utility vehicle
in the late 1990s.
One of the first full size
luxury sport utility vehicles available.
By the 2000s, Lincoln was competing
fiercely with rival Cadillac, which
had introduced its own
sport utility, the Escalade.
Around that time, Lincoln discovered
through research that a substantial
portion of its customers also owned pickup
trucks and thus the idea for
the Blackwood was born.
Designed to cater to a high end
customer, the interior was covered in
leather, the bed had a two door
tailgate, and the truck was finished with
white pin striping.
There was even a limited run
Neiman-Marcus edition, named for the famous
premium department store.
But the Blackwood was a dud
and was discontinued after a year.
Though it was built on a Ford
F-Series platform, it lacked the capability
commonly found on true pickup trucks.
Cadillacs Escalade EXT sold better, but
that model was soon discontinued
as well. But many say the time for
the high end pickup has come and
automakers have become a great deal more
shrewd about how they make them.
The shift away from the traditional
low lying silhouettes of passenger
sedans and sports cars and toward
the taller profiles of utilities and
trucks have spurred automakers to carve
out new niches enabled by the
shift. For example, consider the
proliferation of high performance SUVs
and off road ready trucks.
Such as Toyota's TRD lineup, the Chevrolet
Z71 and ZR2 trims, the Ram
Rebel and Power Wagon,
and the Ford Raptor.
A lot of this is enabled by
new manufacturing techniques and overall leaps
in engineering, quality, and reliability that
have made trucks and SUVs
easier to live with overall and made
them more accessible to a wider array
of buyers. They have larger cabins and
get better fuel economy often have
several cameras attached, driver assistance
systems, and so on.
Luxury and premium can mean different
things to different automakers, but
they could loosely be thought of as referring
to the top one or two trim
levels in any given trucks lineup.
All three Detroit automakers sell top
shelf versions of their trucks
bearing prices far above the typical
base price for the same model.
The largest U.S. truck maker overall
is General Motors, which has
dedicated an entire brand to what
it considers more premium trucks.
GM owns both the
Chevrolet and GMC brands.
Both Chevrolet and GMC have higher
level trims, but Chevrolet tends to
focus more on the mainstream truck buyer,
while GMC aims squarely at the
premium market. In fact, GMC can be thought
of as a pioneer in the higher
end pickup market. So we've really
established ourselves in a unique spot
in the market and that's really the
only premium truck and SUV brand.
And the way, we like to talk about
it is, it's premium that's made to be
used, so that's what
our customers like.
First introduced in 1999, GMC's Denali
lineup has long been its most
premium product and it
has been quite popular.
In 2019, GMC's total Denali lineup of
trucks and SUVs comprised about 30%
of all GMC U.S.
retail sales and the lineup had
an average transaction price of $55,800.
Average transaction price or ATP, is the
actual amount a customer pays for
a vehicle. GMC Denali ATPs have shot
up in recent years and exceed those
for Mercedes, BMW, and Audi
according to the company.
ATPs for the Denali version of
GMC Sierra full-sized pickup truck alone
were $56,408.
GMC also recently launched an AT4 trim
level, which is a premium trim with
more rugged features and capability intended
for customers who want to
drive off road or be a
bit rougher with their trucks.
It was supposed to be positioned
between mainstream Sierra trucks and the
Denalis. But customers are optioning
those trucks up too.
GMC updated its heavy duty line of
larger full size pickups in late 2019,
and the automaker said about 80% of its
sales for that lineup so far are
AT4 and Denali trims and average
transaction prices are reaching above
$70,000 .
Ford F-Series, the best selling lineup
of full-size pickups, had record
transaction prices in 2018 on demand
for its high series pickups.
Ford's F-150 starts under $29,000, but
the company sells four trim levels
with sticker prices above $50,000 stretching
to a starting price around
$67,000 for the limited trim.
The truck comes with a two panel moon
roof in the quad cab version and the
same high powered V6 engine
found in the Ford Raptor.
One of the biggest stories in the
full sized truck segment over the last
few years has been the arrival of the
2019 RAM 1500 , which has won
multiple industry awards and stolen market
share from competitors both the
RAM 1500 and the larger 2500 won Motor
Trend's Truck of the Year award for
2019 and 2020, respectively.
The 1500 also won the North American
Truck of the Year award at the
Detroit auto show and a
slew of other honors.
But the RAM 1500 is snatching
praise even outside its segment.
Industry website Cars.com
recently awarded the 1500 its Luxury Car
of the Year award, in spite of
the fact that the RAM is neither
a car nor something that would easily
slot into the luxury category.
The RAM beat out cars from more
established luxury players such as BMW's
X7 SUV.
The Cars.com award specifically went to
the two top trim packages
available for the 1500, t he
Laramie Longhorn and the Limited.
Which are the top trim levels
which are remarkably luxurious inside.
I mean beautiful rich leather.
They smell great.
The other materials are good.
There's interesting use of color.
In addition to conventional luxury features found
in the RAM such as soft
leather and wood trim, the truck has
a few traits not typically found in
pickup trucks, which helped it
compete more with conventional luxury
rides. The truck's capability was also
crucial to the team's decision.
RAM pickup sales were up 18% in 2019.
It was a record year for the
brand, which has historically trailed General
Motors and leader Ford in volume.
All this comes as the average transaction
price of the RAM 1500 has jumped
almost 50% since 2010
to about $50,000.
That is for the entire lineup from
the base model that starts at about
$32,000 to the top Limited
trim starting around $53,000.
So which one of these premium
trucks commands the highest transaction
prices on average?
Out of the half ton pickups, the
smallest and most popular class of full
size models, that award goes to the
Ford F-150 Limited with an average
transaction price of $68,075, the GMC
Denali comes in second at $61,658,
and the RAM Limited
in third at $59,924.
All of those are higher than
the average transaction prices for BMW,
Mercedes, and Audi, though not quite as
high as those for Land Rover at
over $76,000 and Porsche
at over $93,000.
Bear in mind, these
are average transaction prices.
It is entirely possible for a heavily
optioned pickup truck to transact at
an even higher price than that.
Though these percentages of buyers might
seem small, they are paying
sometimes 20 to 30 thousand dollars more
for their trucks than buyers for
the cheapest trims. That can
mean some pretty solid profits.
The profit's definitely there and having
them as stand alone trim levels
is great. But even if you look at
the lower end, the mid and the lower
trims, they get optioned up.
I mean, nobody's really transacting at
just right where that trim level
starts. You see some of
them where they overlap.
The creep is certainly
to the next trim.
This growth in premium pickups is
a bright spot for U.S.
automakers, which have seen their fair
share of troubles over the last
decade. In the luxury
and premium space, U.S.
automakers have struggled at times to
carve out an identity for
themselves, distinct from those
of European automakers.
Ford's Lincoln brand is one American
mark that has received praise for
newer models. To be sure, only
a small portion of buyers.
About 3 to 6 percent, depending on
the brand, are trading in luxury
vehicles for trucks.
For the most part, these pickups
are attracting a whole new market.
Truck buyers who want their trucks to
be a bit more polished and kitted
out than what they are used to.
Fiat Chrysler's RAM has sent a bit of
a shot across the bow at its
competitors, but General Motors says its
own research shows customers are
more interested in features and capability
than interiors in their premium
trucks. It is worth noting that GMC
vehicles typically come with at least
some basics found in premium and
luxury vehicles, such as leather
interiors. Customers paying that
amount typically expect that.
But so far, GM says it
is focusing on technology capability and
engineering over smooth or
elegant touch points.
These kinds of features include beds made
from carbon fiber, a first for
the industry, and the brand's MultiPro
tailgate, which can be used for
different functions such as a step into
the bed or a bed extender.
GMC trucks also can come with a
15 inch configurable heads up display.
As of early 2020, Ford planned to
release a new version of its F-Series
pickup, its first full
redesign in several years.
The automaker is tightlipped on
specifics, but industry watchers are
expecting Ford to include a bevy of
high priced options for buyers looking
for the top of the line.
If sales of trim levels at
Ford's Lincoln brand are any indication,
customers appear to be seeking out
priciest versions of new products.
When the new Lincoln Navigator debuted in
2017, 84% of buyers were opting
for the Black Label and Reserve
trim, the two highest level trims
available with prices that
could run above $100,000.
Perhaps GM's biggest announcement of 2020
so far was the expected revival
of the Hummer brand name
as a fully electric truck.
The first time around, the Hummer was a
stand alone brand name in the GM
stable. The reincarnated Hummer will be under
the GMC banner and will be a
luxury product. The Hummer might be a
smart move for the brand say those
who follow the industry.
Sales of sport utility vehicles and trucks
tanked around 2008, hit by both
a recession and a fuel crisis.
They have since recovered, but the
question remains what happens if gas
prices rise to a level uncomfortable for
customers or the economy takes a
turn for the worse and consumers begin
to feel that a full sized luxury
pickup with a $70,000 price tag is
a luxury they simply do not need.
This could spell trouble for the big
three, which tend to compete best in
the large truck and SUV segments.
The best selling mid-sized pickup in the
United States is not from an
American brand at all, but
from Toyota, the Tacoma pickup.
Toyota has found a way to compete
well in the truck business while
contending with a
pretty patriotic U.S.
customer base and an onerous
25% tax on imports.
Toyota produces its midsize Tacoma and its
full sized Tundra in the U.S.
to get around the tax.
Some industry watchers think that an
oil shock or economic downturn might
not spark a shift back to traditional
passenger cars, but it could send
customers to cheaper, smaller, and
more efficient trucks and SUVs.
In the meantime, some industry watchers
worry that the market has simply
become saturated with variety.
There are now models of truck
and SUV in every conceivable configuration.
Competition is stiff.
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