(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
DALLAS — As Mark Reuss, General Motors' North America president, entered his first State Fair of Texas, he could see what GM is up against in a crucial battleground state for full-size pickup sales.
He drove past Toyota's truck display, where a Tundra dangled 50 feet overhead; a mechanical bull situated among Chrysler's Ram pickups with banners boasting the Truck of Texas award; and finally a towering oil derrick with a Ford F-Series spinning atop with decals reading "Best selling truck" and "36 years running."
"Everybody drives pickups and loves pickups here," Reuss said Thursday at the fair. "It feels bigger than life, and it is."
GM, which hadn't redesigned its pickups since 2006, has seen its Chevrolet Silverado and GMC Sierra combined market share slip to 33 percent in the Texas half-ton truck market last year from 36 percent in 2008, according to researcher Polk. That puts it behind Ford's F-Series, the national leader and 2012 top-seller in Texas with 38 percent of the state's market. Reuss said GM, which revealed its new heavy-duty trucks here, can overtake Ford in Texas. The regular half-ton pickups, all new this year, began arriving in showrooms in May.
"We've got the newest truck in the market. It's been a long time since General Motors had the newest truck," Reuss said. "The opinion and recognition of the how good the truck is starts in Texas. If we can win here with a great truck, there are ripple effects here across the whole country."
Texas is the nation's largest market for new pickups, which represent one in five vehicles sold there last year, according to Polk. It's about one in eight nationally. More large pickups were purchased in Texas last year than the total for the next three largest truck markets: California, Oklahoma and Florida.
"There's more at stake in Texas in terms of volume and opportunities," said Jessica Caldwell, an analyst with Edmunds.com, a Santa Monica, Calif.-based website that tracks auto sales. "It's looking like it's shaping up to be quite the battle between the players."
GM's pickups generated an estimated 16 percent of the company's global earnings before interest and taxes last year and the redesigned versions could boost EBIT by more than $1 billion in 2013, according to a Citigroup Inc. estimate.
"There's inevitably a lift when there's a redesign," said Tom Libby, a Southfield, Mich.-based analyst with Polk. "It's now Chevrolet and GMC's turn and they will get a lift, but it's a short window because they've got a new F-Series coming next year."
At Ford's 300,000-square-foot (28,000-square-meter) display at the fairgrounds, a billboard boasted, "We own work." A nearby stadium-appropriate video screen ticked off new F-Series sales under a headline that read: "Every 42 seconds, another F- Series is sold." Ford executives wore black polo shirts and khaki-colored pants.
"Suits really don't fit at the state fair," Joe Hinrichs, Ford president of Americas, said in an interview after Ford's presentation for the 2015 Ford F-Series Super Duty and King Ranch heavy-duty version, which is named after a working ranch in Texas. He noted that Texas is the only state fair where he speaks.
During his presentation, Hinrichs didn't miss an opportunity to highlight Ford's success in Texas. He told the crowd that Ford had delivered its 33 millionth F-Series this year at Sam Pack's Five Star Ford in Plano.
A recovering economy, new-housing starts and pent-up demand are driving demand for pickups, he said.
"The energy sector, agriculture sector — all of these are big drivers of what's driving the truck market in volume, especially right here in Texas," he said.
It's in that environment that Reuss and his team are fighting for attention. Reuss said in an interview last week in New York that it's difficult to convert brand-loyal pickup buyers.
"We also know that the government ownership influence is highest among truck buyers," he said. "Being owned by the government is problematic for now."
The U.S. has said it will sell all of its GM shares, acquired as a result of the automaker's 2009 government-backed bankruptcy, as soon as December.
GM is bringing out a new high-end version of the Silverado called the High Country in the fourth quarter to better compete against Ford's King Ranch. The High Country moniker is embroidered into the headrests of the heated-and-cooled bucket seats. Tom Peters, the head designer for the trucks, estimated that the High Country has about 25 percent more chrome on the outside compared to the base Silverado.
On Thursday at the fair, GM revealed new heavy-duty versions of its Silverado and Sierra pickups that are set to reach U.S. showrooms in the first quarter.
GM is also spending more time in Texas.
At filling stations, drivers find the ice chests wrapped with pictures of the new truck while ads play on closed-circuit TV screens at the pumps. TV advertising for the new Silverado began in Texas before the rest of the nation saw ads during Major League Baseball's All-Star Game Home Run Derby in July.
The brand's goal is to make 869 million impressions with digital advertising in Texas, including a large number of Hispanic shoppers.
Chevy also has 77 Silverado billboards in Texas.
Chevy has 42 events planned in Texas for the Silverado, which is about 33 percent of the 126 planned by year's end. GMC has 11 of its 23 planned for Texas, according to GM. Chevy in August announced a partnership with the University of Texas football team and the company held early marketing campaigns to showcase the pickups to journalists at programs in the San Antonio area in May and Austin in September.
"We've never actually done anything like this, where we went hot and heavy in Texas at so many different levels," Maria Rohrer, marketing director of Chevy full-size trucks, said in an interview. "It's probably the most intense I've ever seen."
About 40 percent of the initial production of the new Silverados went straight to Texas — double the typical 20 percent that might go based upon sales history, according to GM. About 30 percent to 35 percent of the new Sierras went to Texas.
Most of those first Silverados were special Texas Edition versions. It's a $2,000 option that includes extra chrome, 20- inch wheels and a large Texas Edition badge. About 20 percent to 25 percent of Silverados sold in the state are Texas Editions, according to GM.
As Reuss prepared to leave the fair, he paused for a moment to reflect on what he'd seen:
"There's no other place like this."