General Motors Co on Thursday unveiled new versions of its Chevrolet and GMC full-size SUVs in an effort to maintain the company's dominance in this lucrative segment of the U.S. auto industry.
GM's Chevrolet Tahoe, Suburban and its GMC Yukon for the 2015 model year will hit U.S. dealers in the first quarter of 2014, company officials said.
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The giant people movers and trailer haulers from GM make up 74 percent of the U.S. full-size SUV market, which also includes the Ford Motor Co Expedition, the Nissan Motor Co <7201.T> Armada, and the Toyota Motor Corp <7203.T> Sequoia.
"This is an important and profitable segment and we have set the bar high," to keep that leadership, said Dan Ammann, GM chief financial officer and executive vice president, in a statement on Thursday.
GM unveiled the vehicles in simultaneous shows in New York, Los Angeles and Dallas on Thursday.
In 2015, the Suburban turns 80-years-old, and GM says that is the oldest model name still in production. This is the 12th generation of the Chevy Suburban.
Jeff Luke, executive chief engineer for GM's trucks, said that GM did not get as close as some had reported to cancelling its full-size SUV line in 2008 when U.S. gasoline prices spiked to record highs or in 2009 when the company went through bankruptcy and reorganization. He said the reason for its survival was because of a base of loyal customers in this lucrative segment.
Luke said GM hopes to keep sales leadership with new SUV models that have better aerodynamics, lower road noise, and better fuel economy than its predecessors.
John Schwegman, GM executive director for U.S. truck product and pricing, said sales for the full-size SUV segment are down from a "boom" between 1995 and 2005 when gasoline prices were low and the shift of consumers toward crossover vehicles just started.
A crossover utility vehicle, or "crossover" for short, has SUV-like style and utility, but handles more like a car than a truck. Automakers are rolling out more crossovers in every size and price segment as consumers, attracted by the flexibility and functionality afforded by crossovers, continue to move away from more traditional body styles.
Schwegman said sales of full-size SUVs in the U.S. have dipped from a peak of about 600,000 early last decade, to an expected 250,000 to 275,000 per year.
But the profit on these big vehicles is just too big to ignore.
The rollout of the SUVs is the continuation of the launch of GM's biggest mass-market consumer vehicles, which began with the June launch of its full-size pickup trucks, the Chevrolet Silverado and the GMC Sierra.
The full-size SUVs are built on the same platform, or underpinning, as the pickup trucks.
GM makes more than $12,000 per vehicle on profits of these full-size trucks and SUVs.
GM's current big trucks and related SUVs account for about 60 percent of the company's global profit, according to analysts. Citi has estimated the new models could bring the automaker more than $1 billion in additional operating earnings in 2013 and 2014.
In 2012 and 2013, GM is revamping 70 percent of its U.S. product lineup in what is easily the most ambitious rollout of new vehicles since the company received a $50 billion bailout package from the U.S. Treasury in 2009.
Through August, sales of the Chevy Tahoe were about 54,800, up 22 percent, while the Suburban's sales of about 31,850 were up 4 percent, according to Autodata Corp.
GMC Yukon sales were about 38,000, up 24 percent.
Ford Expedition sales were down 3.6 percent through August to about 23,650, while Nissan Armada sales were down 20 percent at about 9,600 and Toyota Sequoia sales were up 9 percent at about 9,050.
(Reporting by Bernie Woodall;editing by Sofina Mirza-Reid)