Japan challenges Big 3 on big pickups

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As Ford Motor Co. relaunches its vaunted F-150, it should check the rearview mirror: Import brands are on track to pick up share in the last category ruled by Detroit.

It appears to be a lopsided battle. Ford's F-Series is the top-selling vehicle in history and No. 1 seller for the past 21 years, and Ford is betting the farm on the flagship F-150. Owner brand loyalty for big pickups is the highest of any category. The Big 3 have 96% market share in large pickups; Toyota, the only import brand available, has just 4%.

But five to 10 years out, import brands' big-pickup share could be "somewhere between 20% and 25%-and that's probably being fairly conservative," said Fred Suckow, director of Nissan marketing at Nissan North America, which in December releases its own brawny entry, the Titan.

Toyota also has clear ambition to expand in the sector, although the manufacturer does not want to overplay its hand. Ernest Bastien, Toyota Motor Sales USA corporate manager-vehicle marketing, said domestics are "clearly in command" of the big-pickup category, adding, "Our aspirations are really somewhat modest by comparison." But not subtle: Toyota in 2006 opens a Tundra factory in San Antonio, the heart of truck country.

"San Antonio economically probably did not make the most sense for Toyota, but from a marketing standpoint it made perfect sense," said Stephen Cavender, who runs a Toyota dealership in the city. He adds: "The plant is easily expandable."

It's no surprise more players want to join the ultimate pickup game. Sales doubled over the past decade to 2.2 million pickups, and models got bigger, fancier and more expensive as the market shifted from work trucks to personal use. While new entries are appearing, category growth has stalled. Analysts don't expect much growth going forward; the use of rebates and other incentives is increasing, and it will be a market share game.

Toyota and Nissan together should command 8% to 10% of the big-pickup category within two to five years, said Jeff Brodoski, analyst with consultancy J.D. Power & Associates.

other challengers

Yet Mr. Suckow's longer-term view is plausible. Nissan's first-year sales target is 100,000 Titans. By 2007, Toyota will have capacity to build 250,000 Tundras. Meanwhile, Hyundai Motor America and American Honda Motor Co. are rumored to be preparing pickups; neither would comment. In five to 10 years, Mr. Suckow said, Toyota could get 10% share, Nissan could snare 7% to 8% and Honda and Hyundai could split 3% or 4%, giving imports a big-pickup share roughly even with Japan's current 22% share of the overall U.S. light-truck market.

Big pickups have been an anomaly, a segment where Detroit faced almost no competition. The big pickup is a uniquely American product; customers, especially in the core work market, have tended to be loyal to Ford, Chevy or Dodge in particular and domestic products in general. Barriers to entry are high: Customers expect numerous varieties of engines, cabs and beds; a 25% tariff on truck imports means a foreign company needs to assemble in the U.S. to be competitive. Domestic brands have a marketing advantage: a long reputation for selling tough trucks communicated with hard-hitting campaigns.

But Toyota's Mr. Bastien noted about one-fourth of big-pickup owners already have an import vehicle in their garage. Mr. Suckow said "the modern truck guy," who uses the pickup for personal use, is more likely to consider an import truck. Japanese companies aren't new to the overall pickup market, having sold small pickups for decades.

Still, to compete, import brands need strong products-and advertising. Rosario Criscuolo, chairman of the Toyota Dealer Council, expects Toyota to do a separate truck campaign. Said Mr. Bastien: "We are looking very carefully at what type of communications we should have to support our trucks," though "we don't want to be in the position where we subrogate our car brands with a truck brand."

No one suggests the Japanese will take over the big-pickup category. "It will take 25 or 30 years before there is parity," said Mr. Criscuolo, a Lansing, Mich., Toyota dealer.

General Motors Corp. is the biggest seller of large pickups if its Chevrolet and GMC sales are combined, but Ford's F-Series is the top-selling vehicle brand. Ford has sold 27 million F-Series since the line began in 1948. F-Series sales last year (813,701) were nearly double those of the top car, Toyota Camry (434,145). Merrill Lynch auto analyst John Casesa said F-150 is Ford's largest single profit contributor with an estimated margin of at least $6,000 a truck.

avoiding glitches

Ford, recovering from financial losses and other setbacks, is laboring to avoid quality glitches that beset its recent launches. The new truck is getting good reviews-and the old version led its segment in J.D. Power's initial-quality and vehicle-dependability studies. Said Todd Eckert, F-150 marketing manager: "There are going to be viable competitors ... but we believe we have the product ... to meet them head on."

Japan is following the leader. Toyota's first big pickup, the 1993 T-100, was underpowered. Its replacement, the slightly undersized Tundra, is solid but not fully competitive with Detroit's best, said Jim Hossack, a consultant with researcher AutoPacific. He said the Nissan Titan is a strong contender, and he said Tundra will get more competitive with a redesign down the road.

All of this is reminiscent of minivans: After their early models fizzled, Japan redesigned the vans to meet needs of American buyers-and took Japan's U.S. minivan share from 9% in 1995 to 30% today. Likewise, Japan was late to embrace sport utilities, but it's since taken about 30%-and is looking to take more.

contributing: jean halliday

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