Bigger trucks are getting smaller engines in bid to improve fuel efficiency

Key Points
  • GM is adding a four-cylinder engine to its full-size Silverado pickup, a highly unusual move.
  • While customers are running to SUVs and trucks, automakers are trying to improve fuel economy to reduce exposure to rises in gas prices or regulation.
General Motors Co. (GM) 2019 Chevrolet Silverado pickup truck sits on display.
Andrew Harrer | Bloomberg | Getty Images

Big trucks are getting small engines. And that seems to be just fine.

General Motors said Friday it will sell a version of its full-size Chevrolet Silverado pickup with a four-cylinder engine, a highly unusual move for a truck that size.

The engine will replace the six-cylinder currently on the Silverado, and despite the two fewer cylinders, Chevrolet says the new engine is "expected to offer 22 percent more torque, greater fuel efficiency and a stronger power-to-weight ratio than the current model."

It is yet another move by a major American automaker to improve efficiency in its biggest and often best-selling vehicles. U.S. automakers sell a lot of large trucks and SUVs, and have been moving away from selling passenger cars. But these actions have raised fears they will be vulnerable if gas prices rise or strict fuel regulations take effect.

Ford is going all-in on electrification, said Jim Farley, the company's president of global markets, at an event at Ford headquarters in Dearborn, Michigan, earlier in the year.

The F-150 currently has a six-cylinder version of Ford's EcoBoost engines, which use techniques such as turbocharging and direct fuel injection to improve efficiency. That engine was first introduced in 2009 while gas prices were coming off a 2008 record high above $4 a gallon.

Since then, low gas prices and a resurgent economy have sent consumers flocking back to trucks and SUVs, which is a trend industry observers don't see reversing anytime soon.

The trouble is gasoline prices won't always be so low. Of late, prices are on the rise. The U.S. average gasoline price climbed this week to $3 a gallon, due in part to pricier oil and the phasing in of summer-grade fuel.

This shift in the market toward larger vehicles has created a paradox, some would say a problem, in the American auto market. Automakers are making vehicles more fuel efficient than ever, but American consumers are buying less efficient vehicles.

While fuel efficiency has improved in individual models over their previous counterparts, the gains have been offset by a shift in the mix toward the larger vehicles, which has effectively frozen fuel economy for the entire fleet at about 25 mpg.

Meanwhile, fuel economy standards that took effect when Barack Obama was president in 2012 are now up for a midterm review. Automakers met with President Donald Trump earlier in May in part to discuss fuel standards, and the National Highway Traffic Safety Administration is expected to release a potentially updated version of the targets this summer.

The possibility that the government will make any adjustments to the Obama-era fuel economy standards, set in 2012, has inflamed environmentalists.

The trouble, automakers say, is the targets are too ambitious, especially in light of the fact that consumers are hungry for larger vehicles.

Automakers have considerably improved the fuel efficiency of the vehicles they sell. But as things stand they are going to have to keep improving, dramatically, to meet federal fuel efficiency targets over the next several years, and to shield against potential volatility in oil prices.

At the same time they are faced with customers who increasingly favor SUVs, trucks and crossovers, and want safety systems and other features that are making vehicles heavier.

Meanwhile, very few consumers seem to want hybrids or electric cars. Despite the proliferation of models, they form less than 5 percent of U.S. auto sales combined.

Fuel economy has improved in the U.S. by about 14 percent, from about 22 mpg in 2010 to around 25 mpg in 2017, said Carla Bailo, president and CEO of the Center for Automotive Research. And they are improving still at about a pace of 1 mpg per year, more or less, she said.

But if you look at what consumers are actually buying, fuel economy has stagnated, said Michael Sivak, who runs the automotive consulting firm Sivak Applied Research.

This may change if companies continue to improve the efficiency of power trains.

These big trucks are essential for Detroit's Big Three automakers, Ford, GM and Fiat-Chrysler.

All three majors are expected to still control more than 80 percent of the U.S. market in pickup trucks, compared with only 39 percent of the SUV and crossover market, according to data from LMC Automotive.

"Ford makes really makes its money on the F-150 and then the Mustang," Kelley Blue Book analyst Rebecca Lindland told CNBC.