The Perils of Second Place: Denali Is GMC's Biggest Worry, Greatest Asset

Travel back in time and tell someone that luxury pickup trucks will one day become the auto industry’s biggest money makers. They’ll laugh, but you’ll have the last one.

As the Denali sub-brand grows in importance for parent General Motors, the luxo treatment applied to GMC trucks and SUVs has never been in more danger from rival automakers in Dearborn and Auburn Hills. Keeping Denali healthy and growing means walking a thin line. Still, there’s those who fear the sub-brand isn’t realizing its true potential.

GMC’s director of exterior design, Matt Noone, admits it keeps him up at night.

“The growth of the premium truck segment outstripped our expectations,” Noone told TTAC. “We don’t want to relinquish our position to anyone.”

One nagging thought plagues Noone: Is GMC doing all that it should with its Denali sub-brand?

The 2019 GMC Sierra, with its available magic tailgate (“MultiPro” in GMC parlance), reshaped sheetmetal, reduced weight, and added content, is currently entertaining journalists on the faraway, misty isle of Newfoundland. There’s black Denali models crawling all over the Rock, as well as a handful of new AT4 premium off-roader models and a lone SLT with X-31 off-road package. A low-class pickup jamboree this ain’t.

While yours truly is not at liberty to tell you how the new Sierra Denali handles on the road (not yet, anyway), suffice it to say the overall recipe is a logical progression from what came before. Avoiding the polarizing styling choices of its Chevrolet Silverado twin, the Sierra’s modernized take on the previous generation’s styling surely generates fewer night terrors. There’s acres of chrome drizzled all over the Denali, and the new AT4 cuts a muscular figure — just avoid looking at the awkward mix of optional 20-inch wheels, a 2-inch suspension lift, and oddly shaped wheel arches.

The AT4 exists because GMC doesn’t enjoy being in second place (behind Ford) in the premium truck segment, Noone said. Even more worrying is the prospect of falling behind amid new competition, and ceding market share to its rivals. As the AT4 gets ready to woo ungentrified premium truck buyers with its Denali trappings and butch exterior, Ford has a return salvo loaded and ready: its F-150 Limited. For 2019, the priciest Ford half-ton welcomes the F-150 Raptor engine. That means 450 horsepower and 510 lb-ft of torque awaits big-bucks buyers via the Raptor’s upgraded 3.5-liter EcoBoost V6 — greater power and twist, it should be noted, than GMC’s top-flight 6.2-liter V8.

Meanwhile, Ram has a new 1500 from which to build its own luxo barges. It got an early taste of that action with the 2018 Limited Tungsten Edition. For GMC, the self-described premium truck maker, the battleground is fierce, and growing fiercer.

“I feel we need to do more to keep our position,” said Noone, adding that GMC customers regularly claim they’ll happily pay the cost of added glitz. “The demand is there.”

Already, the brand is doing more, and it’s paying big dividends. Some 30 percent of GMC’s U.S. sales in 2017 were Denali models, a take rate that rises to roughly 60 percent when you consider the Yukon and Yukon XL. The Sierra HD approaches this take rate, while the Sierra 1500’s Denali popularity hovers around 30-35 percent. The same figure applies to Acadia. Naturally, average transaction prices are skyrocketing.

According to Richard Latek, GMC’s U.S. marketing director, sales of Denali models over the first half of 2018 amounted to 28 percent of the brand’s volume. The addition of the AT4, essentially a rough-and-tumble Denali for customers who don’t like being seen as “city,” should benefit GMC’s premium truck volume, Latek said. GMC projects an AT4 take rate of 10 percent for the Sierra line, but Latek believes the company’s lowballing.

Sweetening the AT4’s proposition is an available nylon-based carbon fiber bed (“CarbonPro”) that shaves 62 pounds from the truck’s mass. Available in the second quarter of 2019, the optional bed features a corrugated surface that’s six times more resistant to deformation than a conventional bed. Availability extends to Denali and SLT in 2020. Those three trims also see the addition of GMC’s trick “MultiPro” six-position tailgate for 2019, after which the brand might choose to make it more widely available.

So, where does GMC take Denali from here? Demand at the lower end of the market, for obvious reasons, remains limited. The Canyon Denali’s take rate is about 18 percent; the Terrain, about 15 percent. “Price point is a sensitivity in the compact segment,” Noone says, adding that midsize truck buyers largely prefer a rugged product. “Some appetite” exists for a premium focus in that segment, he claims.

As GMC weighs its options at the smaller end of the market, the Denali badge seems destined to reside mainly on hulking, ever more lavish full-size pickups and large SUVs.

[Images: Steph Willems/TTAC]