Discounts on trucks average $3,759

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DETROIT – General Motors Corp.’s new full-size pickup trucks, which are headed for an early release this fall, seem to have the competition running scared – and heaping thousands of dollars in discounts on their trucks.

The Chevrolet Silverado and GMC Sierra, which will be built off GM’s crucial new GMT900 platform, are slated for release in the fall and may be the most awaited – and feared – new vehicles in years.

That’s especially true when one considers that pickups are some of the most profitable vehicles that automakers sell and have the added benefit of being more resistant to increases in gas prices than other profitable trucks, such as SUVs.

Incentives for full-size pickups averaged about $3,759 last month, according to the consumer Web site Edmunds.com. But Chrysler Group, Ford Motor Co. and Toyota Motor Corp. spent far more than that.

Automakers don’t publicly release how much they spend on rebates and other special deals, so several independent firms such as Edmunds.com estimate the amounts with data from dealerships nationwide.

Sales of full-size pickups are down 1 percent this year, which is largely the result of customers waiting for GM’s new trucks. During the first three months of the year, sales of GM’s full-size trucks are down 9 percent, and the automaker has lost 3.1 percentage points of market share in the segment.

But the competition – namely the automakers that sell the Dodge Ram, Ford F-Series and Toyota Tundra – seems to be pulling out all the stops to snag those customers before the spruced-up Silverado and Sierra trucks hit the market and to ensure that their customers stay in their brands.

Incentives for full-size pickups averaged about $3,759 last month, according to the consumer Web site Edmunds.com. But Chrysler Group, Ford Motor Co. and Toyota Motor Corp. spent far more than that.

Automakers don’t publicly release how much they spend on rebates and other special deals, so several independent firms such as Edmunds.com estimate the amounts with data from dealerships nationwide.

Chrysler led the way on incentives for its Dodge Ram, spending about $5,841 per truck, Edmunds reports. Toyota followed in second place, spending about $4,984; Ford came in third, spending an average of $4,097 per vehicle.

Jesse Toprak, executive director of industry analysis at Edmunds.com, said the pickup truck deals have been ramping up, and it’s clear that the automakers are trying to get an “early edge on the competition.”

Some industry insiders are skeptical that pickup buyers might swap brands, because the pickup truck market – which is dominated by farmers, contractors and boat owners – is renowned for its loyal customers. Data from the Power Information Network, a subsidiary of J.D. Power and Associates, suggest that more than half of pickup buyers stick with their preferred brand when they trade in their old trucks.

But with so many vehicles sold in this segment, including nearly 2.5 million last year, even small shifts can be significant and painful for automakers.

Himanshu Patel, an analyst for JP Morgan, said GM or Ford typically lose 2 to 7 points of market share during the first year after the other launches a new pickup truck. That means as many as 170,000 sales, or enough to keep one assembly plant in operation, could be up for grabs in the coming year.

Art Spinella, president of CNW Marketing Research in Bandon, Ore., said it’s clear that automakers are making some ambitious plays for those customers.

“This is one tactic for shortstopping a giant launch for GM,” Spinella said.

However, the strategy doesn’t seem to working wonders for all the automakers.

Ford has managed to pick up 2.8 percentage points of market share in the full-size truck segment this year, and now sells 37.8 percent of the full-size pickups purchased in the United States. No other pickup truck model sells as well.

Toyota’s Tundra has not been so lucky.

The Japanese automaker is offering more incentives on the Tundra than it offers on any other vehicle, showing how important and competitive the segment is. Still, Toyota lost a hair of market share, 0.1 percentage point, and now sells just 5.9 percent of the full-size pickups in America.

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Experts say that shows how competitive and loyal the market is, and how much trouble the Japanese automaker is having breaking through in this category.

Toyota spokesman John McCandless defended the performance and spending, saying a new Tundra is coming to market in early 2007, and the bigger incentives are typical for an outgoing model.

“Our full-sized pickup business has pretty much been good,” he said.

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Meanwhile, Chrysler is spending more than anyone else on incentives for its Dodge Ram, which was just freshened up last year, with a new frame, suspension and interior. But the company is seeing relatively modest gains. Sales of the truck are up 1.5 percent this year, and Chrysler picked up 0.4 percentage point of market share.

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Chrysler spokesman Kevin McCormick said the Ram is still a strong product in the market and that incentives are necessary to help customers make up their minds.

“It is a highly competitive segment,” he said.



(c) 2006, Detroit Free Press.

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Distributed by Knight Ridder/Tribune Information Services.

AP-NY-04-04-06 1836EDT

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