First Storm Front - Softening Sales for Full Size Pickups Overall

First, the price of gasoline has gone up over the last year or so. Way up. And that is likely to affect the full-size pickup segment as a whole, and the #1 player most of all, at least in terms of unit volume. People may opt for smaller and more fuel-efficient mid-size pickups or defer buying a pickup until they are more sure of the price of gasoline.

Ford does particularly well in the Heavy Duty part of the full-size pickup market, that subsegment is dominated by diesels. The pump price of diesel fuel has gone up significantly more than gasoline. Again, that will affect all diesel pickup makers, and again, Ford is the most exposed.

Second Storm Front - Increased Competition from All New Toyota Tundra

The next issue is the all-new for the 2008 model year (2007 calendar year) Toyota Tundra. The Tundra looks like a winner product, at least in the 1/2 ton part of the business. My guess is that Tundra volumes will increase by about 75,000 units per year (Toyota says they plan to sell 200,000 of the new Tundras per year). While the Tundra may actually cause the full-size pickup market to expand somewhat, much of that increased volume has to come out of someone else - maybe 40,000 units out of Ford's 900,000 annual F-Series volume.

Third Storm Front - Increased Competition from General Motors GMT900 Pickups

The next challenge will be GM's all-new GMT900 line of 1/2 ton, 3/4 ton and 1 ton pickups. Availability starts late in 2006 and GM will be going wide open throttle with a full range of new full-size pickups by Spring 2007. After what is sure to be a down year in 2006, General Motors is likely to increase their share somewhat in 2007, largely at Ford's expense.

Ford Threatened Most by New Competition

Lets assume that the introductions of outstanding new full-size pickups from Toyota and General Motors do increase the absolute size of the full-size pickup market a bit, but not enough to make up for their increased sales volumes. This demands that their volume draw from the Ford F-Series and the Dodge Ram full-size pickup lines. As the biggest dog in town, Ford is the most vulnerable to threats to its sales volume and segment share (just as Ford and General Motors found when more-than-competitive Japanese-brand minivans gutted the sales of the Freestar/Monterey and GM's U-Vans).

The result of this unprecedented competitive challenge by Toyota and General Motors will be that Ford's truck cash cow is in jeopardy. After losing about half the volume of its Explorer and Expedition SUVs, Ford cannot afford to lose the 50,000 or more units that these competitive actions imply.

Ford Will Remain Segment Leader, But It Won't be Easy

Ford's sales activities are probably planning for the assault today (at least they should be) and we can anticipate substantial marketing activity in advance of the introductions of the new General Motors and Toyota pickups (using the Chrysler strategy of saturating the market with attractive deals prior to a competitor's introduction to suck buyers away from the new vehicle). Look for aggressive marketing, aggressive incentives, price leaders, product line extentions, dealer trips to Hawaii. Ford will pull out all the stops. It has to.

Ford's North American Chief Operating Officer, Anne Stevens, stated at the 2006 Chicago Auto Show that "We are the leader in full size pickup sales and we sold over 900,000 units in 2005. Ford will not give up market leadership." While she did not go into the inevitable arithmetic that would concede that Ford's F-Series volume is threatened, we have to agree that Ford likely will retain segment sales leadership, but the leader will sell substantially fewer units than it does today.