Detroit: Highballing It Into Trucks

Truck sales are on a roll. Despite bitter cold across much of the country and California's earthquake, U.S. sales of light trucks stormed ahead 24% in January, to 416,828 vehicles, easily outpacing a 7.8% rise in car sales. Megadealer Allan Spitzer of Elyria, Ohio, marvels at the Chevy pickups, Plymouth Voyager minivans, and Ford Explorers flying out of his various dealerships: "Demand has outstripped supply pretty much across the board," he says. "I don't know where the top is."

Call it too much of a good thing. Suddenly, Detroit is scrambling to meet demand for its hot-selling trucks--pickups, minivans, and sport-utility vehicles such as the Ford Explorer. And the Big Three are searching for ways to expand truck-building capacity without constructing new plants that could be a financial drag if the market turns down.

GANGBUSTERS. Succeeding is crucial to Motown's profits. Chrysler Corp., for instance, earns an average of more than $7,000 on its Jeep Grand Cherokee and about $5,000 on its minivans, figures Lehmann Brothers Inc. analyst Joseph S. Phillippi. That compares with about $4,000 that Detroit earns on the average midsize family sedan. Trucks are also a key to Detroit's quest to lock in market-share gains against Japan. Partly because of their weak truck lineups, Japanese companies' share of the U.S. light-vehicle market slipped to 23.2% in 1993 from 24.5% in 1992 and likely will slide further this year.

Until recently, though, only Chrysler really went after truck buyers tooth and nail. Trucks made up 59% of Chrysler's vehicle sales in 1993, vs. 47% for Ford Motor Co. and 38% for General Motors Corp. Overall, truck sales have expanded from 33% of the U.S. market in 1989 to 39% last year (chart). But, says Alexander J. Trotman, Ford's CEO and chairman, "over the years, we in the industry have tended to treat this historic shift in the market as a fad that would go away."

Now, all three companies are coming on like gangbusters. GM's strategy: Run the factory around the clock. For example, GM will add a third crew on May 1 at the Flint (Mich.) plant that builds full-size vans. On Jan. 1, 1995, the Pontiac (Mich.) East plant that builds the C/K pickups also will get a third shift. These and other steps could give GM up to 200,000 more trucks a year.

Ford sees relatively low truck sales as one reason it made just $392 per vehicle last year, vs. $1,546 for truck-heavy Chrysler. Now, Ford is trying to deal with the problem by switching some car plants to truck production and adding small increments of capacity. For instance, it spent over $900 million to convert a former car factory in Oakville, Ont., to build its new Windstar minivan, which makes its debut next month. That alone will add at least 300,000 trucks to Ford's annual capacity. Factor in some steps to add truck capacity elsewhere, and "that's going to make a big difference" in Ford profits, promises Ford Treasurer David N. McCammon.

JAPAN GEARS UP. Among Ford's additional truck-boosting efforts: It spent over $650 million to add the F-Series pickup, America's top-selling vehicle, to the Kentucky Truck plant in Louisville that previously built only bigger rigs. And it added a new paint shop and increased the line speed to squeeze more F-series and Broncos from its Wayne (Mich.) truck plant last fall. Ford also hiked production of Mercury Villagers and Nissan Quests 20% a year, to 155,000, at a plant near Cleveland.

Chrysler is due to jack up truck capacity soon, too. Its two minivan plants are already operating on three shifts. Now, the plants that build its torrid-selling full-size Dodge Ram pickup and Grand Cherokee are maxed out on two shifts and full overtime. Possible solutions: At the Detroit plant that builds the Grand Cherokee, Chrysler is mulling everything from eliminating downtime to adding new machinery and starting a third shift. A Mexican plant will begin building some Ram pickups in June.

The big worry now: that Motown will let quality slip as it expands production. Chrysler has already recalled its Ram pickup twice and the Grand Cherokee four times. Meanwhile, Japanese rivals are adding more trucks to their lineups. Honda Motor Co., for instance, is expected to introduce a new minivan this fall and has begun slapping its brand on Isuzu's Rodeo sport-utility, built in Lafayette, Ind., selling it as the Honda Passport. Truck sales may help the Big Three continue their gains against Japan--but only if they avoid past mistakes.

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