* GM invests $3 bln-$4 bln to develop trucks -analysts
* Trucks could add more than $1 bln to earnings in 2013, '14
* 2014 Chevy Silverado, GMC Sierra on sale in 2nd qtr 2013
By Ben Klayman
PONTIAC, Mich., Dec 13 General Motors Co
is counting on muscled-up, more refined versions of its
lucrative Chevrolet Silverado and GMC Sierra full-size pickup
trucks to show investors and car buyers that the No. 1 U.S.
automaker is back on track.
The 2014 model-year trucks are the most critical launch for
the Detroit company since its bankruptcy and $50 billion U.S.
taxpayer-funded bailout in 2009. The trucks are also a linchpin
in GM's ongoing battle with No. 2 U.S. carmaker Ford Motor Co
, whose F-150 truck is the industry's top-selling vehicle.
GM showed off the new full-size pickups in Pontiac,
Michigan, on Thursday, and executives are touting the benefits
of the vehicles, which will initially be offered in the most
popular four-door, "crew cab" version in the second quarter of
"There's nothing more core to our business than our trucks,"
GM North American President Mark Reuss said at the introduction
at a movie studio north of Detroit.
"Our competitors may think that they have smooth sailing
ahead, but let me tell you the weather is about to change," he
said, adding the goal was to beat Ford's F-Series.
GM better hope so. Analysts estimated the company has
invested $3 billion to $4 billion on developing the new trucks
and related engines, as well revamping the plants where they are
Their reception on Wall Street will also be closely watched
by officials at the U.S. Treasury, which still owns about 26
percent of GM. The fate of that stake has been the subject of
much speculation, with analysts suggesting divestiture might
occur closer to the trucks' launch next year.
This week, Treasury sold the rest of its position in
American International Group Inc, which also received a
The current versions of the big trucks and related SUVs
generate profit of $12,000 or more per vehicle and account for
about 60 percent of GM's global profit, analysts said. Citi has
estimated the new models could bring the automaker more than $1
billion in additional operating earnings in 2013 and 2014.
That would be welcome, since the last major redesign of the
trucks was in 2006, and delays caused by GM's bankruptcy in 2009
have put it at a competitive disadvantage in a segment that
accounts for about 11 percent of the market, analysts said.
GM noted that the average age of big pickups on U.S. roads
is more than 10-1/2 years, and the need to replace aging
vehicles means plenty of room for sales growth.
GM's Reuss did not provide sales projections for the new
trucks, but said they would attract new buyers and that demand
would be there as the U.S. housing market improves. "We're
timing this very, very well in terms of construction and growth
in the economy."
GM's inventory of the current large pickups surged in
November as it was caught off guard by aggressive deals by
AutoPacific analyst Dave Sullivan said the new trucks simply
allow GM to catch up to rivals. As a result, he said the
automaker will likely need the next redesign much faster than
normal once Ford comes out with its next F-150 design, due in
"For the traditional pickup truck buyer, they're going to
love this truck," Sullivan said of the new GM trucks. "It's a
simple and well-engineered vehicle, but it appears not to
leapfrog any of the competition."
GM's U.S. dealers are champing at the bit for the new
trucks, saying the interior design is a big step forward from
the current models. They say the new design will make the
automaker more of a player, especially at the top end of the
market, where prices approach $60,000 and margins are high.
"Us having a class-leading truck is critically important to
the success of Chevrolet," said Jason Brickl, chief executive of
Ballweg Chevrolet in Wisconsin, whose two dealerships in the
Madison area derive about one-quarter of sales from the
GM said its 2014 trucks will be new "from hood to hitch,"
including a trio of new V6 and V8 engines meant to improve
power, torque and efficiency. GM also touted a quieter, more
comfortable cab; improved steering, suspension and brakes; and
the use of more high-strength steel. New safety features will
include forward collision alert, lane departure warning, and
front and rear parking assist.
The company said horsepower, torque and EPA fuel economy
estimates will not be available until early next year, but said
the new trucks will outperform the current models.
Analysts said GM's comments about strategy indicated the new
trucks' mileage would not likely challenge the 22 miles per
gallon on the highway achieved by the Ford F-150 equipped with
the turbocharged Ecoboost engine. GM executives on Thursday
questioned whether small displacement turbocharged engines are
the best technology for large pickups.
GM has not announced pricing for the new trucks.
The current Silverado has a starting price of about $24,000,
rising to almost $44,000, and the price tag of the most
expensive Sierra is around $57,000. Ford's F-150 starts under
$24,000 and runs to almost $54,000.
GM's big trucks and SUVs - Chevy Tahoe and Suburban, GMC
Yukon and Cadillac Escalade - remain top draws at dealerships.
Their combined U.S. sales rose 11 percent last year to more than
The redesigned SUVs will debut in 2014, followed by new
versions of the Chevy Colorado and GMC Canyon midsized pickups
in late 2014, Reuss said.
GM's pickup truck sales fell in November, with the automaker
blaming aggressive discounting by rivals Ford, Chrysler
and Nissan Motor Co Ltd. GM has added new incentives
for the trucks for December, and executives indicated they will
cut production to reduce supplies.
Reuss said pickup truck sales were "much better" so far this
month, and that inventory would end the year close to company
targets. GM ended November with 139 days' worth of pickups and
had said it would miss its year-end target of having U.S.
inventory of no more than 220,000 pickup trucks, or 85 days of
In a positive sign for the truck market, however, Citi
analyst Itay Michaeli expects U.S. demand for full-size trucks
to meaningfully outperform the overall industry in the next 12
to 18 months as consumers move to replacing aging vehicles.
LMC Automotive expects total U.S. sales of full-size pickup
trucks this year to rise 8.4 percent to more than 1.62 million
vehicles and hit more than 1.8 million in 2019. It sees GM's
combined pickup sales topping Ford's next year and holding that
lead through 2019.
Officials at Ford said the company is happy with F-150's
lead over Silverado. The F-150 was last redesigned in 2008.
"We're very pleased with the performance of our pickup truck
over the years," Ford U.S. sales analyst Erich Merkle said.
"It's been the best-selling pickup in America for 35 years
Meanwhile, GM will stick with its strategy of offering both
full-size and midsized pickups as a way to satisfy more
consumers. Ford and Chrysler have discontinued their midsized