U.S. automakers eye China's pickup market

Any vehicle is a tough sell in China these days, given the lingering COVID-19 pandemic there. But pickups are weathering the storm better than most, as Chinese automakers draw from the American playbook.

Great Wall Motor Co., by far China's top pickup manufacturer, is booking big orders for its new P pickup, thanks to a strategy of pitching it as a vehicle for families.

Great Wall has been averaging 6,000 sales of the P a month since launching the pickup in October, notes Alan Kang, a senior market analyst at LMC Automotive. The P, called the Pao in Chinese, comes in three grades: a standard comfort-oriented passenger setup, an off-road version and a commercial variant. The passenger offering gets a softer ride, comfy interior and high-tech gadgetry.

"It is the first-ever pickup from a Chinese brand to be classed as a passenger vehicle and is positioned at the upper end of the market," Kang wrote in a report this month that looked at the likelihood of Chinese customers embracing pickups for daily transportation like American drivers.

The P plays a critical role in expanding Great Wall's domestic market share, and the upgraded design is part of the Chinese truckmaker's hope of capturing a bigger slice of overseas sales.

But greater acceptance of pickups in China could also signal big opportunity for U.S. brands in a segment that they dominate and excel in at home.

Ford has been selling its F-150 Raptor in China for several years, and Chevrolet followed with exports of its Silverado and Colorado pickups. But those U.S. entrants are still perceived as luxury toys in China.

If China's domestic producers make inroads, it could spur wider interest in U.S. pickups as well.

"I think there should be more opportunity for them in China," Kang said of U.S. pickups. "Comfort is now a top priority among consumers. And the driving experience is very close to that of a passenger car."

Most pickups in China are utilitarian workhorses, staying in their lane with diesel engines and manual transmissions. Great Wall's P, offered under a newly created Pao subbrand, breaks the mold by offering a 2.0-liter turbo gasoline engine and automatic eight-speed transmission, for starters. Great Wall tops off the P's appeal with an elegant design and plush cabin. The pickup comes in two- and four-wheel-drive versions, selling for the equivalent of about $18,000 to $22,500.

But China's pickup volumes have a long way to go before they reach U.S. levels. U.S. pickup sales climbed 6 percent last year to 3.1 million, accounting for 18.2 percent of all new vehicles sold. In comparison, China pickup sales decreased 4.7 percent to around 452,000, in an overall market down 8.2 percent for its second-straight year of contraction.

Kang forecasts China pickup sales to decline to 390,847 in 2020, due partly to the pandemic.

Pickup sales are supported by a gradual loosening of restrictions on driving the trucks in cities. Regulators have eased up, partly in an effort to fan sales amid the market slump. Demand is considered still largely untapped and primed for long-term growth.

Other big domestic players include Jiangling Motors Corp., Jiangxi Isuzu Motors Co., Zhengzhou Nissan Automobile Co. and Jianghuai Automobile Co. But late last year, Ford told Reuters it might consider local production of pickups, and Fiat Chrysler Automobiles said it planned to someday sell the Jeep Gladiator in China.

So far, Nissan Motor Co. is the only foreign automaker that has localized pickup production. It makes the Nissan Navara gasoline pickup at its joint venture with Dongfeng Motor Group.

If U.S. brands dig deeper into the Chinese pickup market, they may have to downsize a bit. While full-size pickups are booming business in the U.S., Chinese customers demand something smaller. The Great Wall P, for instance, is closer in size to the Ford Ranger midsize pickup.

In introducing the P, Great Wall said it will go to "markets worldwide and compete with international mainstream pickup brands."

The company's ultimate target, it says, is to become one of the world's top three pickup brands.

The truck's new assembly plant boasts an advanced digital logistics network, complete automation of its welding workshop, an army of robots in the paint shop and a fleet of automated guided vehicles to deliver parts for final assembly. Great Wall said the factory "will support the globalization strategy of Great Wall Motors based on its industry-leading intelligent manufacturing level and promote 'Chinese power' to change the world."