Trucks are no longer the ugly ducklings of Detroit.
Automakers who have seen their passenger car sales toss and turn in recent years have been awakened to the profit potential of trucks by soaring sales in the light-duty sector and surging demand for what was once considered to be a strictly commercial or utility klunker.Robert A. Lutz, executive vice president of Chrysler Motors Corp., said in a keynote speech to the Society of Automotive Engineers Truck & Bus Meeting here that trucks have suddenly changed from "second-class citizens" in Detroit to the Motor City's "favorite sons."
Twenty years ago, only one out of seven vehicles sold in the United States was a truck. Today, the figure is nearly one out of three. In the same period, truck sales have tripled, climbing from 1.6 million to almost 5 million last year.
Mr. Lutz predicted that the trend will continue despite the fact that industry forecasts call for a 5 percent to 10 percent setback this year. In fact, he said, trucks will be the biggest growth area in the auto industry for the next five years.
Mr. Lutz's reasoning is that lower fuel prices will continue to encourage the average consumer's interest in trucks while import competition remains less intense than in the passenger car market.
In the 1987 model year, imports claimed 30 percent of the American car market but only 20 percent of the U.S. truck market, Mr. Lutz said. Notably, analysts have credited the strengthening of the yen with tougher times for Japanese pick-up manufacturers.
Mr. Lutz also noted that the definition and appeal of the truck has changed.
"It used to be that a 'truck' was more or less a big, motorized buckboard with a box in the back, driven mostly by farmers, cowboys, and people with gun racks," he said. While that market still exists, it has been joined by ''city-slickers, suburbanites, women, college students, even buttoned-down executives in Brooks Brothers suits."
Minivans and sport utility trucks are leading the way, bridging the gap
from the passenger car market since their introduction just a few years ago. Their sales should reach 800,000 units each by 1990, Mr. Lutz said.
Mr. Lutz expressed relief that Chrysler decided not to step out of the truck market entirely during its financial dark ages a few years ago. The company now plans to push truck development in a big way, spending $2.4 billion in the next five years.
Spending was also a big concern in the wind-up of Mr. Lutz's speech that turned abruptly into what seemed like a "Lee Iacocca for President" campaign.
Mr. Lutz said that Washington budget cutters were doing far too little to end the federal deficit and recommended that current proposals to cut $23 billion to $31 billion should be replaced by the Chrysler chairman's "four 25s" plan to cut $100 billion out of the deficit.
The plan calls for cutting $25 billion each from defense and entitlements while raising $25 billion from a gasoline tax and a like amount through a national sales tax on "everything except food, medicine, and utilities."
Mr. Lutz stressed that new revenue should come from consumption taxes rather than income taxes in order to address problems of competitiveness in the country.
Bringing the speech back to the subject of truck sales, Mr. Lutz said that higher gasoline prices "might choke off a few marginal truck sales, but at today's prices, I can't believe that even as much as a quarter a gallon would hurt that much."