New Chevy, GMC pickups are GM's biggest test since bankruptcy

Thu Dec 13, 2012 10:22am EST
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By Ben Klayman

DETROIT (Reuters) - General Motors Co (GM.N: Quote) is counting on muscled up, more refined versions of its lucrative Chevrolet Silverado and GMC Sierra full-size pickup trucks to show investors and car buyers the No. 1 U.S. automaker is back on the right track.

The 2014 trucks are the most critical launch for the Detroit company since its bankruptcy and $50 billion U.S. taxpayer-funded bailout in 2009. The trucks are also a linchpin in GM's perpetual battle with No. 2 U.S. carmaker Ford Motor Co (F.N: Quote), whose F-150 truck is the industry's top-selling vehicle.

GM will show off the new full-size pickups in Pontiac, Michigan, on Thursday and executives are touting the benefits of the vehicles, which will initially be offered in the most popular four-door, "crew cab" version in the second quarter next year.

"We have made significant upgrades in the key areas of the new Silverado, and improved almost every detail of the truck," Jeff Luke, executive chief engineer for full-size and midsize trucks, said in a statement. "Both Chevrolet loyalists and competitive shoppers are going to find a lot to love."

GM better hope so. Analysts estimated the company has invested $3 billion to $4 billion on developing the new trucks and related new engines, as well as for revamping the plants where the vehicles are built.

The current versions of the big trucks and related SUVs generate profits of $12,000 or more per vehicle and account for about 60 percent of GM's global profit, analysts said. Citi has estimated the new models could bring the automaker more than $1 billion in additional operating earnings in 2013 and 2014.

That would be welcome news as the last major redesign of the trucks was in 2006, and delays caused by the bankruptcy in 2009 has put GM at a competitive disadvantage in a segment that accounts for about 11 percent of the market, analysts said.

GM noted that the average age of big pickups on U.S. roads is more than 10-1/2 years, and the need to replace those aging vehicles means there is plenty of room for sales growth.   Continued...

The 2014 GMC Sierra SLT Crew Cab pickup truck is seen in this undated handout image. General Motors Co is gearing up to show off its new full-size pickup trucks this week just as the No. 1 U.S. automaker is boosting incentives on its rising supply of the current models. GM will unveil the redesigned versions of the Chevrolet Silverado and GMC Sierra in Pontiac on December 13, 2012, but consumers will not be able to start buying the new 2014 models until the second quarter next year. REUTERS/GMC/Handout