GM’s Reuss: Mix Shift Inevitable as Gas Prices Soar; Truck Market to Splinter

NEW YORK – There’s no major mix shift under way yet as U.S. fuel prices march past $4 per gallon, but there is a point where consumers again abandon pickups and SUVs in favor of more fuel-efficient models, warns Mark Reuss, president of General Motors North America.

“There is some psychological place in the United States, with all of us, when gasoline (price) becomes a central issue,” he tells Ward’s after introducing the fuel-sipping Chevrolet Malibu Eco sedan here.

“We’ve done $4 before in 2008, we’re doing $4 again now,” he adds. “If it keeps going up, there is someplace in there when you see some big mix changes.”

Ward’s data shows light-truck share in the first quarter tumbled to 50.6% of the market after closing 2010 with a 54.6% stake.

Although truck share includes popular cross/utility vehicles with car-like attributes such as better fuel economy, SUV share declined to 6.8% of the market in the first quarter from 7.9% in fourth-quarter 2010, and pickup penetration wilted to 12.9% from 14.7%.

At the same time, gas prices started the year above $3 per gallon, according to the American Automobile Assn., and finished the first three months of the year near $4. The current average sits at $3.86, AAA says, and in six states eclipses $4.

Truck share historically weakens between the close of the fourth quarter and the first quarter each year, but the latest shift is surpassed only by the cash-for-clunkers race into passenger cars at the close of the third quarter of 2009 and the gas price spike of second-quarter 2008, when each time it fell to 44.8%.

Tipping point for mix shift exists, but guessing exactly where difficult, Reuss says.

The small- and middle-car segments have been beneficiaries in each of the recent mix shifts.

“Is it a massive change on a mix basis? We haven’t seen that yet,” Reuss says. “But that’s not to say we won’t see it.”

In 2008, the mix-shift stung GM hard, because its lineup was truck-heavy. The auto maker expects a smoother ride with its fresh lineup of midsize and compact cars, should new-vehicle shoppers again turn away from pickups and SUVs.

Asked where the tipping point might be this time, Reuss says simply, “I don’t know.”

The trend will not affect the auto maker’s plans to add a third shift to its heavy-duty pickup assembly plant in Flint, MI, later this year. Reuss says demand remains brisk.

“As jobs go back into the economy, we see the demand for heavy-duty trucks right now pretty robust,” he says. “There is a lot of pent-up demand in terms of replacement, because those trucks are used hard. They’re used to make a living.”

Asked whether GM might consider bringing its utilitarian Holden Ute to the U.S. from Australia to satisfy commercial demand for a smaller, fuel-efficient truck along the lines of the Ford TransitConnect van, Reuss says ‘micro-segmentation” will occur in the pickup segment in the coming years as fuel prices remain high and government-imposed fuel-economy standards grow more strict.

Based on the Holden Commodore sedan, the Ute is a coupe with a pickup bed. GM nearly brought the car to the U.S. as a performance-oriented Pontiac, emulating the former Chevy El Camino, but the auto maker’s 2009 bankruptcy and subsequent jettisoning of the brand halted the Ute’s arrival.

“The bandwidth we have on pickup trucks in the United States is huge,” Reuss says. And he recalls $5-a-gallon gasoline in Australia while running Holden late in the last decade, when local contractors outfitted the Ute for commercial work.

“They don’t need the big bandwidth of a big pickup truck,” he says of the Aussies, pointing also to the TransitConnect’s arrival in the U.S. last year.

“It’s probably a little bit ahead of its time here right now, but that type of micro-segmentation is probably really, really relevant – I get my job done, I do it with fewer operating costs and I enjoy the vehicle.”

But Reuss stops short of assigning the Ute to the U.S. “I’m not going to talk about our future product plans.”

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