In The Midst Of CAFE Negotiations, GM Re-Invests In Trucks

[UPDATE: GM responds to this piece here]

With environmentalist groups on the warpath over forthcoming 2017-2025 CAFE standards, trucks sitting on lots, and the Flint HD Pickup plant idled for much of the month, this is probably not exactly the moment GM might have chosen to put $328m into tooling for new full-sized pickups to be built at Flint. But time and the market wait for no company, and because the Silverado is GM’s single best-selling product, the investment isn’t tough to justify:

“Truck sales play an important role in the success of General Motors,” said Joe Ashton, UAW-GM Vice President. “We are confident that the next-generation of trucks will continue to be an important source of revenue for the company and jobs for our members

In case there’s any confusion though, GM is making perfectly sure nobody thinks they’re making any product choices because of union demands. At the investment announcement ceremony at Flint, Cathy Clegg, GM vice president of labor relations told Reuters [via Automotive News [sub]]

We certainly aren’t going to make a decision and make a commitment solely as a way of getting an agreement. If the market doesn’t drive it, we can’t do that

So, how is that truck market?

GM’s presser notes

GM’s retail share of the full-size pickup market has grown to 40.4 percent through May compared with 37.7 percent in the first five months of 2010.

That’s not bad at all…but it doesn’t really answer the question. So, how is that truck market?

Not bad at all! From 2008 until well into last year it seemed like cars would pull away from the trucks, but the big boys have staged a comeback. And all the growth has been in domestics too, as import brand truck sales have been stalled since the ’08 downturn. In the short term that’s great for Detroit, but in the long term it’s also the first hint of trouble for the overall market. For more let’s dig into those truck numbers

Here’s what happens when you break those trucks into what they really are: pickups, SUVs and vans. With this breakdown we can see that the pickup market isn’t looking all that solid at all, and looks unlikely to ever return to the 3m+ annual sales levels of its halcyon days. All the growth in “trucks” is coming from SUVs… and you can probably guess what the next drilldown is…

Here’s your roaring “truck” market: car-based crossovers, not body-on-frame dinosaurs. With truck-based SUVs headed back down and pickups going nowhere, the long-term prospects for the next-generation of truck platforms aren’t stellar. Let’s hope GM has seen the handwriting on the wall and will have some forward-thinking surprises for the new full-sizers, because in a market like this they need to keep winning retail share. And because nearly two million annual truck units is worth chasing, because Flint’s big trucks are important to GM’ relationship with the UAW and because the Volt is built for those bankable, swappable CAFE credits, this pickup investment is a no-brainer… for now, anyway.