GO
Loading...

New Toyota Pickup Could Mean Big Profits or Big Backlash

Tuesday, 6 Feb 2007 | 1:00 PM ET

As U.S. automakers have struggled over the past years, they have always been able to hang on to one last profitable stronghold – the large pickup truck market. But that fortress is about to be stormed by Toyota as its redesigned Tundra pickup hits the showrooms this week. Toyota is aiming to gain market share in the U.S. pickup sector but there has been some mention of a possible backlash against the Japanese automaker during its latest attempt to take a bigger bite out of the Big Three.

Truck Wars: Toyota on the Move
Discussing the response as Toyota steps up its push to sell light trucks in the U.S., with Rebecca Lindland, Global Insight Sr. Auto Analyst; Karl Brauer, Edmunds.com Editor-in-Chief; and CNBC's Liz Claman

On “Morning Call,” Karl Brauer, editor in chief of Edmunds.com, and Rebecca Lindland, senior auto analyst at Global Insight, discussed Toyota’s strategy in jumping into the pickup sector.

Brauer says Toyota understands that it isn’t going to just waltz right into a niche of the market and dominate it, as it did with the Prius, the car that became the standard for hybrids. Brauer and Lindland both say it’s important to notice that the pickup market in the U.S. is unique. The domestics have owned the market for decades, and pickup owners are generally brand-loyal customers. So while a regular buyer might have no problem choosing a Toyota Camry over a Ford Taurus, the same rule doesn’t necessarily apply for customers choosing between the Tundra and Ford’s F-150 (especially considering that the Tundra is being sold at a higher price point).

Lindland says it will take some time for Toyota to generate loyal buyers for the Tundra. But she also says that every time Ford doesn’t sell an F-150 or Dodge doesn’t sell a Ram, it has an immediate impact on that company’s bottom line because they make so much profit.

Toyota has a relatively scaled-down production plan for the Tundra in 2007. The company has said its goal is to sell 200,000 Tundras this year, although analysts expect that to be ramped up assuming the units are in demand. Brauer also notes that while a super-duty version of the Tundra isn’t yet available, it’s definitely on the way.

The biggest hurdle for Toyota at this juncture, says Brauer, is that it has to convince somewhat-skeptical domestic pickup consumers that it has what it takes to compete with the Big Three. He believes the Tundra is an “incredibly capable” vehicle that has everything that it needs to make a dent in the market – and it likely will – although he expects the real gains for Toyota will be in the long-term.

From a marketing standpoint, Toyotahas reportedly earmarked at least $100 million to promote the Tundra. It aired two commercials during the Super Bowl advertising it as the "truck that's changing it all" (watch them here and here) and promotional campaigns tied-in to NASCAR and bass fishing are in the works. Brauer says Toyota is walking a fine line with its marketing of the Tundra as it makes it harder for the automaker to “push the Prius story” (the Tundra and Prius are pretty much opposites when it comes to gas mileage and emissions). So it seems Toyota is willing to give up some ground as the “hybrid leader” in order to make headway in the pickup sector. We’ll see if it pays off for them once those Tundras start driving off the lots.

  Price   Change %Change
F
---
GM
---
  Price   Change %Change
F
---
7203.T
---
DAI
---
GM
---