U.S. automakers keep on truckin': light truck capacity grows, Ford has edge over GM

You can't win if you don't enter, the junk mail sweepstakes letters always remind. The credo in the automotive business is similar: you can't sell vehicles unless you build them first.

Simple as that sounds, balancing production capacity with consumer demands without overfilling dealer lots is one of the great cosmic challenges of the auto industry. It means not only having the right number of vehicles to sell, but also the right type with the right mix of options. That's not easy in a fickle marketplace, especially when decisions about tooling up factories have to be made years in advance.

But if there's one thing that looks like a sure bet right now, it's the popularity of light trucks (which include minivans and sport/utility vehicles): automakers are gambling with capacity plans that truck demand will continue to grow steadily for the foreseeable future.

Most estimates predict light-truck sales will rise from today's 42% share to about 45% by 2000. Chrysler Corp. associate corporate economist Van Jolissaint says light trucks could capture 50% or more of new vehicle sales by 2010.

These aggressive forecasts are leading to major production changes at the Big Three -- and at offshore automakers as well. Mercedes-Benz AG is building a factory to produce upscale sport/utility vehicles (SUVs) in Vance, AL; Toyota recently confirmed plans for a new U.S. assembly plant to build full-size V-8 powered pickups; and BMW AG is rumored to be eying production of an SUV at its Spartanburg, SC, plant. Ford Motor Co. and General Motors Corp. already are bulking up their truck-producing capabilities.

Ford's moves include building both Explorer SUVS and Aerostar minivans in St. Louis, replacing car production (Tempo/ Topaz) with minivans (Windstar) in Oakville. Ont., adding a third crew at its Michigan Truck Plant (F-series pickups, full-size Bronco SUV and 4-door Expedition SUV due in 1997), and increasing capacity to build the Mercury Mountaineer SUV alongside Explorer and Ranger in Louisville, KY.

GM's moves include adding a third crew at its Oshawa, Ont., (C/K pickups) and Moraine, OH, (Blazer/Jimmy SUVs) facilities and converting its car plant in Arlington, TX, to build trucks, as well as other productivity enhancers.

Chrysler Corp. will have eight ants building trucks by 1997 and possibly nine if it retools its Newark, DE, car plant to build a Dodge Dakota-based compact SUV. It already is running three shifts at two of its truck plants: Windsor, Ont., (minivans) and Detroit (Jeep Grand Cherokee). In 1981, cars composed 78% of North American production. Back then only 22 of the 71 vehicle assembly plants operating were tooled for trucks. For the '90 model year, 36 of 76 -- nearly half -- of U.S./Canada light vehicle plants are tooled for trucks. That number will continue to increase as more transplant operations begin truck output and when GM begins producing C/K platform pickups in Arlington, predicts Ward's Automotive Reports.

overall, the Big Three are heading into the '96 model year with 32 of their 59 assembly plants capacitized for light trucks. GM has 13 North American piants assembling light trucks vs. 12 at Ford. But even with one less plant, Ford can produce more vehicles in North America than GM, WAR says.

(WAR's formula for calculating straight-time capacity now rates plants that traditionally work, or are configured for, double shifts at two-shift capacity, even if they are slated for one-shift production.)

This capacity advantage could help Ford sell more trucks in the U.S. than GM for the first time since 1970, when GM was suffering from a lengthy strike. The only other year Ford sold more trucks than GM was in 1935, says Ford market analyst Joel Pitcoff.

However, GM isn't distraught over that probability. "We feel we're fortunate to be in the position of being able to sell everything we can build. We expect to go over 2 million sales for the first time in history," says GM spokesman Thomas R. Klipstine. "We know we're going to have to build more to sell more, and we're putting into place plans to build more trucks in the future. It's not just a goal to increase capacity; we want to be able to fully maximize our manufacturing capacity."

GM still has a big lead over Ford in total car/truck sales, but Ford's strength in trucks -- the only market segment showing much life this year -- is giving it an edge. GM leads all manufacturers with 6-million-unit North American capacity, or 35.2% of the total. Notably, 60.3% of GM's capacity is for cars, compared with the overall industry average of 57%.

Ford's '96 model truck capacity is 2.47 million, topping Gm's 2.39 million and accounting for 53.6% of it's total capability. Chrysler Corp., mainly because of its two minivan plants, has truck capacity of 1.72 million, or almost 60% of its total capacity.

Capacity isn't everything, of course. The car-buying public has to want what you're building, and Ford truck models are outselling Gm's in several critical segments, such as minivans and full-size pickups, Ford's Mr. Pitcoff points out. "Ford dealers in the truck market have a lot of momentum with Windstar, Explorer, and F-series trucks," he says. "And Ranger (compact pickup) is leading, even though the segment is soft."

Component supply problems also have hurt GM. It was expected to produce only 89% of the trucks it planned in September because of lingering supply problems.