On Wednesday night's Business Nation we aired an in-depth report looking at Toyota's efforts to push its redesigned full size Tundra pick-up in Middle America. As I put this report together over the last month with producer Diane Simon, a few things jumped out at me.
How successful will the Tundra be in middle America?
Relative to how Toyota has done in the past, I believe the Tundra will improve sales in the heartland. The combination of the grass roots marketing campaign and spending more ad dollars will help the Tundra. But I don't expect the Tundra to take major market share from Ford, Chevy, and Dodge in the Midwest. Having lived for years in Minnesota, Kansas, and Colorado I have seen first hand the loyalty of big 3 truck owners in the Midwest and I don't expect that loyalty to erode quickly. As one dealer in the Midwest told me, "The folks around here have no reason or cause to get out their big truck."
Does Toyota have a serious problem with Tundra's V-8 engines?
Right now, Toyota is investigating why 20 of its 5.7 liter V-8 engine Tundra's have failed. The problem is believed to be centered on the camshafts in those engines. It's too soon to know if this will lead to a recall. If the problem is found in less than 1% of the 30,000 V-8 Tundra's that have been built, I would not expect a recall, nor will there be much public bashing of Toyota. Now, if more V-8 Tundra pick-ups have a camshaft problems, then Toyota has a serious problem and that could hurt sales.
Are the big 3 pick-ups positioned to hold off the Tundra?
Yes. And that's the good news for Detroit. This pick-up launch from Toyota is not catching Detroit by surprise. When I talk with designers, consultants, engineers in Detroit, all of them say the same thing: They have to bring their "A" game in pick-ups. Chevy's interiors are a huge improvement. Ford's F-series will likely show the same when the re-designed model comes out next year, and Dodge is studying what needs to be done to keep the Ram competitive. The good news is that all this competition will give truck buyers more and better choices. The bad news for Detroit is that profit margins will come under pressure because the automakers will have to spend more on content.
What surprised me the most while putting this story together?
The degree to which truck owners we approached in Texas are warming up to the Tundra. Now, I can hear the "big 3 cheerleaders" already: "Of course you found people warming up the Tundra because the truck is built in San Antonio." While I don't deny the nearby location of Toyota's plant has some Texans feeling better about the Japanese automaker, the truck owners I talked with are long-time Ford, Chevy and Dodge truck owners. Not only that, almost all of them say they wouldn't give up their truck because they love it. Still, most of them admitted the Tundra impressed them when they've either ridden in or driven one of Toyota's redesigned trucks.
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