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Tundra and Titan – The New Boys on the Block

The first overseas-based footprint on the hollowed ground of the U.S. large-pickup truck market was placed in 1999 by Toyota’s Tundra, and will soon be followed by Nissan’s Titan. Reading some news articles of these occurrences, a person could expect the immediate demise of the traditional large-pickup manufacturers.

However, the effect of Nissan’s Titan is yet to be judged, but the Tundra record is available, and is typical Toyota — start slow and learn the market peculiarities. Toyota first imported the T-100 and as the market found it lacking heft and zip it was replaced in 1999 by the U.S. bodied, import-engined Tundra. Toyota, balancing Tundra production with SUVs, is slowly building up Tundra inventories while adding incentives but has lost both sales volume and segment share in the process.

Following Tundra’s peak 2000 year U.S. segment share of 4.7 percent, a moderate decline brought the January to April 2003 share down to 4.1 percent, well below a reported initial goal of 6 percent. Tundra’s recent sales performance follows its segment path, with U.S. sales down 9 percent in 2001 and 14 percent in the first four months of 2003. Recent Tundra incentives, based on published reports, range from $1,500 to $2,000, about one third less than what’s being spent on comparable Ford and GM products. Toyota is a bit reticent in offering individual brand day’s supply, but a spokesman “would not object” to one estimate of a roughly 40 days’ supply. Other estimates range up to 60 days, neither are a burden but they are, along with shrinking shares and volumes plus serious incentives, an indication of very careful management of inventories and image, particularly as Sequoia sales and segment shares are also in decline.

Nissan, though yet to sell a Titan, has a long and less than stellar history in the pickup market. Through the late 1960s and early 1970s, Nissan, with its imported Datsun unit, dominated the compact pickup segment, holding up to 90 percent of the segment. Toyota, and later the domestics, also imported compact pickups and by 1982 General Motors and Ford, later followed by Dodge, were building here and began to dominate the hunt for compact pickup buyers. Nissan switched to the U.S.-sourced Frontier, yet its share continued to decline and in the first four months of 2003 again fell to a recent low of 7.8 percent, the lowest share of any of the major players. At their current 2003 sales rate, it is doubtful that 2003 Frontier sales will reach the 65,600 Datsun registrations of 1971. Obviously, pickups are a very tough market for Nissan. Even Toyota, the strongman of the Japanese players, has lost segment share to the domestic compacts.

As for the large pickups, the segment operates within the mathematical rule of 100 percent (AI, January 2003). Any new entry into any market will automatically reduce the market share of the originals. That was well illustrated in the compact pickup market as domestics took share from overseas brands. The reverse is and will be true in large pickups. Both Nissan and Toyota will receive wide press coverage and spend millions of promotional dollars to promote their new or additional products. The profitable large-pickup market will be hard fraught within a slightly shrinking total pickup volume. (AI, May 2003).

The fight will be interesting. Large pickups do not follow car trends. Loyalty runs deeper. Personal experience is more important. Faddishness is less important. The domestics are much better at trucks than cars. Cuteness is null and void. Heft and power are important. Diesels help. Rural and small-town dealers help. For most buyers, skid-pad numbers are even less relevant than for cars. With all this said, in great probability, if not in certainty, the new boys will gain share of the large-pickup segment. They do, however, have their work cut out for them, particularly Nissan, but they will gain share. General Motors and Ford will continue to fight for the dominant place on the sales roster and Dodge is not in any way a pushover. A few words of caution — don’t forget the rule of 100 and don’t jump to any early conclusions. It will be many years before the dust even begins to settle enough to allow a clear view of the long-term results.

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