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Small-truck comeback

GM's new mid-size vehicles designed for the North American driver

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ACME, Mich. -- General Motors last week gave the first sneak peek of the all-new midsize pickup truck family it will start selling next year and confirmed the pair will keep their traditional names: the Chevrolet Colorado and GMC Canyon, said Chief Financial Officer Dan Ammann.

The 2015 model pickups return to the GM lineup after ending production a year ago. The final stock is still being sold off.

While full-size pickups are huge business in North America, compact or midsize pickups register less than two percent share of total industry sales, according to data provided by Polk analyst Tom Libby.

The conventional wisdom is the improved fuel economy of larger trucks and the small bump up in price make them more attractive to buyers.

Ford was once a leader in the smaller truck segment. But when Ford redesigned its midsize Ranger, it chose not to sell it in North America, steering customers instead to the larger F-150. The Ranger is a hit elsewhere in the world and Ford can't build enough of them.

In the U.S., the Toyota Tacoma, which has about 50 per cent of the small-truck market, has largely filled the gap for consumers who want a smaller pickup that fits in their garage.

In 2012, the last time GM offered the small truck, it had 16.4 per cent of the segment in the U.S., said spokesman Jim Cain. Sales of the two totaled less than 46,000.

GM will build its new pickups in Wentzville, Mo., where it has invested $513 million in new tooling. They are North American, not global vehicles, although they do share components with their counterparts sold in Brazil, Thailand and other international markets.

Ammann said the North American versions were designed specifically to meet the needs of customers here, while declining to provide any details such as whether it will change in size from its predecessors.

But he said the two models are targeted at different buyers.

"The Colorado is positioned as a sport truck," Ammann said, while the Canyon is the work truck.

Ammann said the segment used to be a big part of the overall truck market and diminished because automakers weren't offering trucks customers wanted -- something GM aims to correct.

"We want to redefine the segment," he said, including more refinement and performance.

There is room in the segment with Ford no longer a player, Libby said. GM and Ford usually mirror each other's actions, making small pickups a notable exception that will be interesting to watch.

"Ford will be watching. If the Colorado and Canyon do well without hurting sales of the Silverado and Sierra, Ford will have to reassess," Libby said.

Conversely, GM may rue its decision. "The segment has declined since GM made the decision (a few years ago to proceed with a next-generation of small trucks)," Libby said. He figures even if GM captured 25 percent of the segment it is still looking at 100,000 sales at best of the Colorado and 30,000 Canyons.

The smaller pickups complete an overhaul of GM's truck lineup that started with the new full-size pickups launching now. Heavy-duty pickups follow later this year, as well as full-size SUVs. The Colorado and Canyon complete the overhaul when they launch next year.

The truck strategy flies in the face of GM's overall strategy of more global platforms for economies of scale that translate into savings which allows the automaker to offer better value vehicles.

Other efforts to improve value include having suppliers locate closer to GM plants to reduce logistics costs.

These efforts should help GM achieve its goal of 10 percent profit margin in a few years, Ammann said.

As for paying dividends to shareholders, Ammann said there are no plans to do so at this time but it will be considered down the road.

-- Detroit Free Press

Republished from the Winnipeg Free Press print edition August 23, 2013 E3

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