GM's Bringing Back the Canyon and Colorado. Good Move?

I've already stated my displeasure as a Ford (NYSE: F  ) investor that the Ranger isn't for sale in the U.S. while it's offered in 180 other countries. The problem is that consumers who don't use vehicles for work are buying smaller vehicles with better fuel mileage and lots of technological innovations. That's why I think the decline in the midsize pickup could reverse in the future. General Motors (NYSE: GM  ) sees the opportunity, too, and has moved back into the midsize market that it had previously abandoned. Here's why it's a good move, and how it could affect investors.

American exodus
None of Detroit's Big Three currently makes a midsize truck. Chrysler killed the Dodge Dakota in 2011. Ford had quite a loyal following in addition to fleet sales that made the Ranger popular -- but it also killed production in 2011. Last year, GM discontinued production of its smaller Chevy Colorado and GMC Canyon models.

That left all the market spoils to Toyota's (NYSE: TM  ) Tacoma and the Nissan Frontier.  Now Toyota and Nissan can try to make headway in a segment they've been consistently shut out of. They have the opportunity to learn more about truck consumers and build loyalty at the entry level.

Trucks represent the most profitable vehicle segment in the U.S. market, but the midsize truck isn't as profitable as the full-size variety, and its segment of the market had been in decline for years. Last year, the full-size market represented 1.6 million trucks, compared with 264,000 smaller models. And that's why Detroit bailed.

As a former marketer, I know that segment gaps can be bad for top-line revenue growth. Larger companies want their products at every level, from the entry level to the luxury. So why did the Big Three do what they did?

Ford, for its part, said its loyal consumers would simply step up to the F-Series. That didn't happen. Meanwhile, the market share for the Tacoma surged 16% in 2012 and is up 22.9% in the first quarter of this year.

GM is fixing its mistake and plans to revitalize the market by bringing back the Canyon and Colorado -- for starters.

"We're going to really target different buyers with these two trucks," said GM North America President Mark Reuss. He added: "We'd love to have a truck like a Chevrolet midsize truck go really attack the West Coast with a lifestyle truck that is really beautiful and fun. It's a different positioning than a semi-serious, duty-cycle truck that we might do with a Canyon."

That's a perfect way to attack the market and prevent competition between its models. I expect the American consumer to jump at the chance to buy one of these trucks, and I think GM will be the market leader in the midsize segment by mid-decade.

Think long-term
As an investor and writer, I preach investing with a long-term mindset. I have great things to say about Ford's recent vehicles, its management, and its bright future, but in this case, I think management made a short-term decision that could cost the company later.

If the downsizing trend takes hold in the truck segment, Ford could miss the rebound in smaller trucks. It could also lose F-Series sales if all of its competitors end up offering entry-level midsize trucks from which consumers could step up to competing larger models.

GM sees potential in the midsize pickup, while Ford apparently doesn't. I like GM's decision here and expect investors to be happy with the developments over the next year. Maybe Ford sees something I don't? What do you, as consumers, think? Let me know in the comments section.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 20, 2013, at 9:07 AM, ABN2nds wrote:

    The S-10's were crappy enough, then they built the even worse Colorado/Canyon and they are bringing them back...........isn't that how they got into trouble in the first place?

  • Report this Comment On April 20, 2013, at 9:23 AM, specstrum wrote:

    I am waiting for it,hope the put diesels in them.I had to s-10 blazers and loved them

  • Report this Comment On April 20, 2013, at 9:25 AM, AttfayElleybay wrote:

    Bring back The Canyonero.

    Can you name the truck with four wheel drive, Smells like a steak, and seats thirty five? Canyonero! Canyonero! Well, it goes real slow with the hammer down, It's the country-fried truck endorsed by a clown, Canyonero! Canyonero!

    12 yards long, 2 lanes wide, 65 tons of American pride! Canyonero! Canyonero! Top of the line in utility sports, Unexplained fires are a matter for the courts! Canyonero! Canyonero! She blinds everybody with her super high beams, She's a squirrel-squashin', deer-smackin' drivin' machine, Canyonero! Canyonero! Canyonero! Whoa, Canyonero! Whoooooaaaa!

  • Report this Comment On April 20, 2013, at 9:34 AM, mklimcza wrote:

    I drove s-10's for 20 years. Great for those who wanted a truck without a big hulking 1/2 ton. Bought a Colorado and it was the worst vechile I've owned. Had to go through arbutration te get my money back. Then drove a Tacoma for 3 years until an offer of retail price got me to sell.

  • Report this Comment On April 20, 2013, at 9:49 AM, dwduke wrote:

    Design them so they look like something that hot rodders will change into low riders like the S-10 was. The Canyon-Colorado trucks didn't look good as a low rider or street meachine. They were just plain ugly.

  • Report this Comment On April 20, 2013, at 9:52 AM, specstrum wrote:

    the canyon looked to Asian on interior for me,i don't like Asian prod

  • Report this Comment On April 20, 2013, at 10:06 AM, redcarpetmuncher wrote:

    The colorado was a genuine piece of junk! if GM wants to successfully compete in the market they need to start over from scratch and come up with a new name for it (maybe they could call it the "S10 Again")

    The small / mid sized trucks were big sellers when they were actually built well and had good fuel mileage. The consumer would accept the weak acceleration in exchange for the fuel savings. The colorado has awful performance, poor build quiality and the fuel savings (compared to a 1500) is minimal.

  • Report this Comment On April 20, 2013, at 10:55 AM, TheOldRanger wrote:

    I've owned one pickup and it was a 1985 Nissan (small 4 cylinder) and it was extremely dependable and I kept it for 14 years before donating it to a charity for disadvantaged kids. I sure wish I still had that truck. My brother-in-law had a GMC Sonoma that just literally fell apart on him. He currently has a Nissan Frontier and loves the truck. I would like to have another pickup, but if I get one, it will probably be another Nissan... great truck, dependable, got decent gas mileage for a pickup, etc....

  • Report this Comment On April 20, 2013, at 11:07 AM, wireyear wrote:

    I have owned mid-size American trucks my entire adult life, starting with a GMC S-15 in 1983. Two Dakotas and two Rangers later I still wouldn't consider myself a "truck" guy, but if you own your own home I really don't see how you can get by without one. Considering the fact that my current 4x4 Ranger only gets about 16 miles to the gallon, I can understand why Ford stopped selling Rangers. Doesn't a new F-150 do a lot better than that, and it can tow a haul a lot more. But I can see also see that there could be a niche market for a small truck for the surfer crowd. Where GM is missing the boat is by not coming out with an updated version of the EL-Camino. I still turn and look at every mid-80's one that I see. If they came out with one that could tow, had a functional bed, looked bad-ass, and had a convertible hard-top, yikes! I would be selling the Ranger and the BMW to stand in line for that!

  • Report this Comment On April 20, 2013, at 12:15 PM, Vance1965 wrote:

    I was a loyal GM customer for years but would never purchase another. When Obama bailed out the UNIONS pension fund with taxpayer dollars that ended it for me with GM. If they came out with a truck that ran on pond water had 500 HP and cost 10k I wouldn't buy it. Screw GM.

  • Report this Comment On April 20, 2013, at 12:15 PM, Ahovala wrote:

    Did anyone bother to look on the side at the "related tickers"? There is a reason that Toyota's stock price is 10 times that of Ford and 5 times that of GM! As much as people talk brand loyalty Toyota keeps on selling and selling. GM and Ford already gave up on this market years ago. No new technology, no product development no interest in the market because it wasn't as profitable as the big truck market. They made the same mistake with the car market and now they are playing catch up. They did the same thing in this segment. This would explain the difference in the price of their stocks. It would also explain the difference in how much money the companies make. My Grandfatehr used to say that we won the war and we are losing the peace. We are still losing the peace. Which stock would you rather own 1,000 shares of?

  • Report this Comment On April 20, 2013, at 12:33 PM, locsphere wrote:

    This bumbs me out so bad. I just got a Nissan Frontier PRO4X... I was looking to buy Chevy but the Colorado was gone so I went with Nissan. I looked at Ford but the Ranger sucks It just looks wimpy and and f-150 should not cost 45,000

    I went with the Midsized frontier! I like it, but would have loved a Chevy Canyon or Colorado.

  • Report this Comment On April 20, 2013, at 2:20 PM, busterriggs wrote:

    I work for a county water department that in 2009 bought 2 new Rangers and 2 new F-150,s . The trucks have been ran side by side and mileage is similar on them . The rangers seem to get worse gas mileage than 150,s and we are not allowed to tow with them because of bad exp. with them when new . The rangers also have a gear shift problem and this has caused runaways with both of them . service issues seem to be a lot higher on the rangers than the 150,s also . I am 6ft tall and way around 250# . The rangers are miserable for me to be in . Someone really large could not own these trucks . Seems to me Ford was building these trucks as cheaply as possible and the end result was not thought of . By the way the rangers also cost about the same as the 150,s when bought with state purchasing asst. since then we have only gotten full size trucks and they have not been fords . I am a Ford man and currently drive a 2011 Expedition . It pains me to say it but if Ford doesn't wake up and improve fuel mileage in Expo the 2011 will be my last ford product .

  • Report this Comment On April 20, 2013, at 2:43 PM, MeisterOfTy wrote:

    I like my Colorado crew cab Z71 4x4. Gives me reasonable cargo capacity for what I need, the I-5 engine has good low end torque and tows my boat with ease and is a fine surf fishing vehicle on the outer banks.

  • Report this Comment On April 20, 2013, at 5:34 PM, Snowman48 wrote:

    Personally I think GM is foolish to have abandoned any of it's truck markets. I was once a powerhouse in the large and medium truck market as well the light duty and smaller truck segment. People who use trucks for business are constantly replacing and or repairing their vehicles so there definitely is a profit center in trucks of all sizes. I'm glad to hear they are re-entering the smaller truck segment and wish they would return to the larger truck market as well. This is especially true in their medium truck line geared toward the light commercial user and farm markets.

  • Report this Comment On April 20, 2013, at 5:36 PM, brucelee64485 wrote:

    PLEASE GM, FORD, etc!! How about a mid sized, crew cab, truck with a REAL honest 6 FOOT sized bed with a good diesel option. I could never understand why everyone else could build a crew cab mid sized truck with a 6 foot bed that is usuable but the big two could only build a crew cab with that poor excuse 4 foot bed. Some of us really do use our truck once in a while and could use the extra space. I'd be first in line for an S-10 crew cab, 6ft bed diesel optioned truck.

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