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Foreign automakers Mitsubishi, VW, Mercedes challenge Detroit in growing US pickup market

Key Points
  • Senior officials with Mitsubishi and Volkswagen say they are currently exploring different pickup truck options.
  • Hyundai is already working on a production version of the popular Santa Cruz concept.
  • Mercedes launched its first-ever pickup, the X-Class, overseas in 2017, and analysts think it could come to the U.S.
Vokswagen Tarok concept pickup
Handout/Volkswagen Group of America, Inc.

The pickup segment has been one of the engines driving the U.S. new vehicle market and it's likely to get a lot more crowded over the next few years, with Mitsubishi, Volkswagen and Hyundai, among others, considering adding the utility trucks back to their lineups.

Senior officials with Mitsubishi and Volkswagen say they are currently exploring different options, with both expected to make their moves before the middle of the coming decade, according to industry analysts. Hyundai, meanwhile, is already at work on a production version of the popular Santa Cruz concept it first revealed at the 2015 North American International Auto Show.

Still other manufacturers, ranging from mainstream Fiat Chrysler to highline Mercedes-Benz, are considering their own pickups, said Augusto Amorim, a senior analyst with LMC Automotive. Most of the new entrants will target the midsize truck market, he said, "which we expect will be one of the fastest growing segments" in the U.S. between now and mid-decade.

Before Mitsubishi locks down plans, North America COO Mark Chaffin said "[we] have to have one that's the right fit for Mitsubishi, for our demographic, and something that's really competitive in the market," according to trade publication Ward's.

Dodge-Dakota-Cars-More-Expensive-Used-SS.jpg
Typical Monthly Payment New: $321Typical Monthly Payment Used: $326Total Savings Over Term: $300The Dodge Dakota is a pickup truck for people who actually need a pickup truck. If your most strenuous transportation duty involves bringing groceries home, then the Dakota is probably not for you. On the other hand, if you’re hauling construction equipment, lumber or heavy machinery, this midsized pickup is ideal.The typical monthly payment on the truck is $321 new and $326 used. This discrepancy of
edmunds.com

Mitsubishi has offered several pickups to U.S. buyers over the years, most recently going with a rebadged version of the Dodge Dakota it called the Raider. It now has several alternatives after being absorbed into what has become the Renault-Nissan-Mitsubishi Alliance. It could update the pickup it now sells in over 150 global markets under a mix of names including Triton, L200 and Strada. But as part of the Alliance, Amorim said in an interview that he expects a U.S. truck would likely be based on the same platform as Nissan's current midsize model, the Frontier.

"We expect them to use the Frontier platform to enter the U.S. market in 2024," the analyst said, as a 2025 model.

VW is going through a similar exploration process, Scott Keogh, the CEO of Volkswagen Group of America told another industry trade publication, Automotive News, this week. In its case, however, it has even more options:

  • The German automaker showed off one possibility at the 2018 New York International Auto Show, a midsize concept based on the same platform as its three-row Atlas SUV;
  • At this year's New York show, VW revealed a downsized truck concept dubbed Tarok, which offset its short stature by using a creative approach to turn its rear seat into part of the pickup's bed;
  • With VW already partnering with Ford on light commercial vehicles and discussing a variety of other joint ventures, it could try to negotiate a deal which would let it build a version of the new Ford Ranger that just recently returned to the American market after a lengthy absence.

VW previously built a compact pickup in the U.S. during the late 1970s and early 1980s, based on the same platform as its Rabbit hatchback. It is generally expected to lean towards using a car-based platform for an American model, and going with a version of the Tarok concept could be particularly appealing, as Keogh told Automotive News a production model "will be made for the South American market [in 2020]. The question we have is, could something like this make sense, with modifications, in the U.S. market?"

Whatever approach they ultimately take, both Mitsubishi and Volkswagen are projected to enter the midsize pickup market in the U.S., rather than the full-size segment. Domestic automakers overwhelmingly dominate that market – which provides General Motors, Ford and Fiat Chrysler with the bulk of their earnings. The two foreign players, Toyota and Nissan, have repeatedly failed to gain more than a toe-hold in the market for bigger, full-size pickups that can to toe to toe with the Ford F-150 or GM's Chevy Silverado.

CNBC | Mack Hogan

It's another story in the midsize segment which has long been dominated by imports. Once larger than the full-size segment, demand for model's like the Toyota Tacoma began to lose steam in the early years of the new millennium and, by the time the industry hit bottom during the Great Recession, Honda and all three of the Detroit manufacturers started to pull out.

General Motors decided to give the midsize market another try, however, for 2015 returning with the Chevrolet Colorado and GMC Canyon models. Demand proved so solid that Honda rushed out a new version of its own midsize truck, the Ridgeline. Ford, which continued to produce a version of its Ranger for overseas markets, initially hesitated but, for 2019, it returned with an Americanized version of the truck. And Jeep, which hasn't offered a pickup since 1992, has just staged its own comeback with the midsize Gladiator.

The flood of new products is clearly paying off. The U.S. full-size pickup sales have been hovering at a steady 2.3 million to 2.4 million a year, a figure LMC Automotive expects to hold through mid-decade. Sales of midsize models, meanwhile, jumped from 452,000 in 2017 to 524,000 last year, with the consulting firm predicting that will top 600,000 this year and hit 714,000 by 2025.

That's the sort of lure that has other brands considering their options. That includes Fiat Chrysler, which could revive the Dakota under its Dodge brand or the Ram division, which produces the company's full-size 1500 and heavy-duty models. Either way, a second midsize model was included in the five-year corporate plan the automaker's late CEO Sergio Marchionne revealed last June. The problem, Ram brand boss Reid Bigland said in an interview, is coming up with the right business model and choosing the best brand to market it under.

CEO Dr Dieter Zetsche and Volker Mornhinweg, Head of Mercedes-Benz Vans present the new Mercedes-Benz Pickup at a press event held at the art gallery Artipelag in Stockholm, Sweden on October 25, 2016.
Vilhelm Stokstad | Getty Images

Yet another entrant could be Mercedes which launched its first-ever pickup, the X-Class, in 2017. Initial plans didn't include the U.S., but a number of analysts now have a version of the luxury truck on their product forecasts.

"The challenge is positioning: should it be a luxury truck or a commercial vehicle," said Amorim. "I don't think they know how to sell it and who they would sell it to."

As with almost every other vehicle segment in the U.S. market, pickup trucks have grown steadily larger over the years. The current version of the midsize Chevrolet Colorado is nearly as large as the full-size Chevy Silverado of three decades back.

Some in the industry believe that could create a new and even smaller option that could serve as a replacement for the compact pickups that proved particularly popular when Baby Boomers were just starting to take to the highways.

The 2020 Chevy Colorado ZR2 Bison.
Adam Jeffery | CNBC

Ford, for one, has indicated it is working up a truck that would be smaller than the Ranger. And Hyundai's Santa Cruz also is expected to fall into the compact category, at least if it stays close to the original concept model.

But buyers shouldn't expect the sort of bargains that were offered back in the 1960s and 1970s. Models like the old Chevrolet S10 could be purchased with a minimum of creature comforts, no power windows and mirrors, for example, and certainly not the touchscreen-controlled infotainment systems that millennials crave. Today's vehicles also have to meet government emissions, mileage and safety standards that drive up prices.

To hold down costs, Volkswagen's Keogh indicated any future pickup would likely be built in Mexico, a path other manufacturers likely would take. That approach would not just save them on labor costs but would also sidestep the "chicken tax", a tariff put into place more than 40 years ago that would put a 25% surcharge on imported pickups.