Business

Keep on trucking

Canadian demand for big wheels shifts into overdrive

JOHN SCHOFIELD September 16 1996
Business

Keep on trucking

Canadian demand for big wheels shifts into overdrive

JOHN SCHOFIELD September 16 1996

Keep on trucking

Business

Canadian demand for big wheels shifts into overdrive

On the ice, world-champion figure-skater Paul Duchesnay is the embodiment of balletic beauty and grace. On the road, however, he projects a tougher image. Duchesnay, who teamed up with his sister Isabelle to capture the silver medal in ice dancing for France at the 1992 Olympics, roams the roads and ravines around his Aylmer, Que., home in a silver Hummer, a U.S. army troop carrier turned overgrown sport-utility truck. The $60,000 driving machine first gained fame beating back Saddam Hussein’s legions during Operation Desert Storm, and is endorsed in ads by Hollywood macho-meister Arnold Schwarzenegger. Although Duchesnay’s skating career is on hold due to injuries, the 35-year-old athlete still attracts a crowd every time he goes for a drive. “As I pass by, people look in utter fascination,” he says. “Some cars slow down and just scrutinize the whole thing.”

What’s this—have Canadians gone truck raving mad? The answer is a big, beefy Yes. Minivans, pickups and sport-utility vehicles (SUV)—the term applied to automobiles such as the Hummer, Jeep Cherokee or Chevy Blazer—are more popular than ever. And as carmakers unveil their 1997 models in the coming weeks, the love affair promises to get even hotter. In the past 14 years, the light truck’s share of the Canadian auto market has doubled to 41 per cent—or 465,202 vehicles in 1995. Those figures are sure to be surpassed this year, says analyst Dennis DesRosiers. “The serious debate in the industry is whether light trucks could overtake the car market,” he adds. Chrysler Corp. already relies on light trucks for 60 per cent of its sales. With demand so fierce, manufacturers are enjoying profits of $2,000 to $6,000 on every vehicle, DesRosiers estimates.

Trendiness in trucks does not come cheap. Prices range from $20,000 for a baseline minivan to more than $72,000 for a loaded Lexus LX 450. In most cases, buyers can forget about dealer incentives. Waiting lists for models like the GM Suburban, which seats up to nine adults, are three months or more. Some stressedout customers have been known to pay dealers extra for fast delivery. To get impatient patrons in the driver’s seat faster, General Motors Corp. has converted a plant in Arlington, Tex., from car to truck production, and has cancelled plans to mothball a pickup factory in Flint, Mich.

Hungry to capitalize on the craze, automakers are flooding the market with new models. One of the most ballyhooed entries this year is the Ford Expedition, a full-size SUV designed to compete with the popular Suburban, the Chevy Tahoe and GMC Yukon. Honda will introduce the CR-V sport-utility, hoping to boost Japan’s lagging performance in North America’s light-truck market. So far, “the Europeans and Japanese don’t have the products to compete here,” says Troy, Mich.-based analyst Jim Harbour. The CR-V, short for comfortable runabout vehicle, is already Honda’s biggest-selling nameplate in Japan. Next year, Ford Motor Co. will unveil the Lincoln Navigator, a dressed up Expedition that the company hopes will take back some of the business that full-size SUVs have stolen from the luxury-car class. Further down the road are SUVs from Mercedes and Jaguar. In the sport-utility sector alone—the fastest-growing market—the number of brands could double in the next seven years to more than 60, predicts George Peterson, an analyst with AutoPacific Inc. of Santa Ana, Calif.

Market share of light trucks among all new vehicles sold in North America*

AS LIGHT TRUCKS GAIN IN POPULARITY...

The light-truck boom has been a boon to the Canadian economy. Chrysler’s minivan plant in Windsor, Ont., keeps 5,600 workers busy 24 hours a day, six days a week, and will churn out close to 400,000 Dodge Caravans and Plymouth Voyagers this year. “The minivan has had a very deep and profound impact on the Windsor area, there’s just no denying that,” says Mike Hurst, the city’s mayor. Meanwhile, Honda is reportedly planning to build an SUV at its Alliston, Ont., plant for the 2000 model year, a move that would add millions to a $300-million expansion already in progress.

As with most trends in the latter half of the 20th century, the conspicuously consuming baby boom generation is driving the demand. Consumers aged 30 to 50, unlike their moms and dads, no longer see the truck as the sole preserve of plumbers, painters or country-music fans. Trucks are cool, and blend in perfectly with the active, fresh-air-and-fitness lifestyles boomers like to believe they lead. Automakers have responded by designing trucks that combine utilitarian convenience with comfort and sex appeal.

The once-lowly pickup presents the most compelling evidence of the truck’s transformation from workhorse to wonder wheels. As many as 70 per cent of the 285,000-plus pickups expected to roll off GM’s Oshawa assembly line this year will offer amenities like power windows, upgraded stereos and remote keyless entry; one in five will boast leather seats. Today’s pickup comes complete with a smooth, quiet ride—no need for passengers to check their dentures at the door, as in olden times. Extended-cab models feature a back seat and a third door for young families. Canadians purchasing pickups for personal use easily outnumber commercial buyers.

For Rodney Ball, a community-college instructor in the central Newfoundland community of Springdale, it’s the only way to go. A burgundy-and-beige 1990 Chevrolet Cheyenne is the family of five’s only means of transportation. ‘With the extended cab, everyone can jump in and you can still throw things in the back,” says Ball. GM got personal with pickups in 1988, when it introduced the first full-size model tailored to the comfort-conscious driver. Last year, Ford totally redesigned its 1997 F-series pickups to appeal to pleasure cruisers. The F-series is Ford’s best-selling vehicle in Canada, bar none. In fact pickups are still the backbone of the light-truck trend, with a 17.2-per-cent share of the total Canadian auto market last year.

Minivans come next, with a 15.6-per-cent share. Chrysler remains the “category killer,” with just over 41 per cent of minivan sales, followed by Ford with 27 per cent and GM—which this fall will launch a redesigned minivan under the Chevrolet Venture and Pontiac Transport nameplates—with 25 per cent. “It’s not my dream car,” Ajax, Ont., bond broker James Keating confessed on a recent weekend, as his wife, Pauline, helped their three children into a beige GM Astro van. “But it does the trick for now. These are the station wagons of the ’90s.”

There are signs, however, that the family image is starting to hurt minivan makers. “You just don’t want to have something like your parents had,” says Anne Price of Kitchener, Ont. When it came time to buy a vehicle last year, Price, a Revenue Canada auditor and the mother of a two-year-old boy, decided with her husband, Mike, to buy a used Nissan Pathfinder. Boomers with grown children are equally sold on the sport-utility vehicle. “It’s kind of their sports car,” says DesRosiers. The typical SUV buyer is a well-educated baby boomer aged 30 to 49, claims a survey by CNW Marketing Research, an Oregon-based research firm.

The SUV is getting hotter by the minute. In 1981, sport-utilities accounted for less than one per cent of the Canadian auto market Last year, the figure climbed to 7.5 per cent, and is expected to be even higher for 1996. Many models feature four-wheel drive, a handy feature for self-styled wilderness trekkers but of questionable value to the average suburbanite, whose only off-road experience is a trip to the car wash. “I don’t think I’ve ever had mine in four-wheel drive,” confesses well-known Vancouver sports broadcaster J. P. McConnell, who drives a Ford Explorer. “I didn’t get it because I wanted to go off-road riding,” he adds. “In fact, I try very hard to stay on the road.” For many buyers, if s the image that counts, concedes Todd Scharf, sales manager at NorthShore Off-Road Centre, a North Vancouver SUV accessory and customization shop. “A lot of people just want the look.”

GASOLINE CONSUMPTION IS REBOUNDING

Women are not immune to the lure of ruggedness. Picture one of Peterson’s typical SUV focus groups: seven out of 10 are women, none more than five feet, four inches tall. Asked why they want to drive a big Suburban, “they just smile and say, ‘Nobody’s going to push me around any more,’ ” the California car analyst says. “They really want something that looks intimidating in the rearview mirror.”

That sense of security is especially attractive to women. The sheer bulk of light trucks seems to wrap the motorist in a protective metal cocoon. And sitting higher allows for greater visibility, helping drivers feel more in control.

The problem, of course, is that these days a lot of other drivers are up there, too. People “perceive light trucks as more safe,” says Maryann Keller, an industry analyst with Furman Selz Inc. in New York City. “Whether they are or not is debatable.”

In fact, Consumer Reports raised questions about the safety of two SUV models last month, after the 1995 and 1996 Isuzu Trooper and its twin, the 1996 Acura SLX, nearly rolled over during one of the U.S. magazine’s routine tests.

The watchdog publication labelled both Not Acceptable. With their higher centre of gravity, sports-utility vehicles are more prone to rollovers, but other models have passed the test. Less encouraging is that light trucks are not required by Transport Canada to conform to all car crashworthiness standards. The federal regulator intends eventually to bring minivans in line, but the jury is still out on SUVs and pickups.

Even without a collision, light trucks can do serious damage to the pocketbook. While they tend to depreciate less rapidly, pickups, SUVs and minivans are still gas guzzlers. “The new vehicles get better mileage than they used to,” says Doug Chisamore, sales manager at Avalon Ford Sales Ltd. in St. John’s, Nfld. But they are light trucks, after all, and ratings are still relatively low. An extra few hundred dollars a year on the gas bill “just doesn’t matter,” says Toronto food distributor Moe Cussen, who owns a Jeep Grand Cherokee. “If I was driving across Canada, it might make a difference, but I’m driving to and from work.”

Peterson says his research shows U.S. gasoline prices could rise as much as 25 cents a litre without dampening demand for light trucks. But no politician south of the border “has enough guts” to raise gas taxes to the point where they could hurt truck makers, he adds. As a result, the light truck’s assault on the North American auto market will continue unabated. “It’s a matter of consumer pull and manufacturer push,” says Peterson, “and they seem to be coinciding.” As long as that remains true, light truck plants, and owners like Paul Duchesnay, will just keep on humming.

SCOTT STEELE

JOHN SCHOFIELD with SCOTT STEELE in Vancouver

JOHN SCHOFIELD