Pickup trucks have always been Americans' favorite vehicle, and an area where buyers never compromise on look and capacity. Honda (NYSE:HMC) stepped into the American pickup truck market with its Ridgeline in 2005, but has found it difficult to carve out a niche for the model. Now, however, the Japanese carmaker is gearing up to revamp the Ridgeline.
With the market dominated by Detroit's Big 3 (General Motors, Ford Motor, and Fiat Chrysler), will Honda be able to create ripples this time?
What went wrong
Honda introduced the Ridgeline in the U.S. in 2005 with the midsize pickup truck market in mind. But Ridgeline's structure was more that of a special utility truck with unibody styling, built on the Pilot crossover platform. Ridgeline accommodates cargo weighing 1,500 pounds, with a maximum towing capacity of 5,000 pounds.
Ridgeline's best year since launch was 2006, but it's only been downhill since then -- from 2006 to 2014, sales have fallen a whopping 73%. Through June of this year, Honda sold only 534 Ridgeline units.
What could have gone wrong with the Ridgeline? According to auto experts, lack of a much-needed facelift is part of the answer. In addition, there wasn't much improvement on the technology and engine front.
The truck's unibody structure was a big problem. A unibody is different from a body-on-frame structure, and the latter is a favorite with customers because of its flexibility, strength, and easy maintenance. Last but not least, the Ridgeline didn't impress customers with its towing capacity and fuel efficiency when compared to other key players in the category.
Honda refreshed the model in 2012 for the last time and stopped production in mid-2014.
Still, Honda has high expectations
Typically, trucks and SUVs are cash cows, and Detroit's Big 3 have always relied on these heavy vehicles to cover their overseas losses. This could be a big reason for Honda to stick to the market and not give up on Ridgeline.
Honda will come up with a new Ridgeline in 2016, restarting production after two years of hiatus. The second-generation Ridgeline will look like a traditional pickup truck to attract conventional truck-loving Americans.
It will borrow Pilot's platform and engine strength, and share some features of the Acura MDX. According to speculations, Honda might add new technologies (LaneWatch system, a Blu-ray media system, Smart Entry, and LED headlights with automatic high-beam assist) to the new Ridgeline.
The 2016 Ridgeline (to be launched as a 2017 model) is expected to hit dealers in fall of next year. Though Honda has kept details under wraps, experts are hoping the truck's mileage per gallon will increase significantly.
Trucks and pickups have always sold better than cars in the U.S. The current volatility in oil prices has made things easier for these oil-guzzling vehicles. Last month, car unit sales dropped 3.7% year over year, whereas pickup sales improved 9.6%. Similarly, through June 2015, car sales slipped 1.7% against pickup sales growth of 9.9%.
The sales trend is quite encouraging, and the all-new Ridgeline, if its fuel efficiency is as good as hoped, might capitalize on the opportunity.
Will it succeed?
According to fellow Fool Daniel Miller, there isn't much room for expansion in the midsize pickup truck segment. The segment has remained an underdog compared to the full-size truck category over the past 15 years. Probably because of this, Ford and Fiat Chrysler opted to skip the segment. One big factor is profitability: Making a midsize truck is costly, but it has to be rightly priced vis-a-vis a full-size truck.
The scenario is changing fast, though. Car website KelleyBlueBook.com says midsize pickup truck sales are trending up. Through June, sales have gone up 51.8% compared to the year-ago period. General Motors is playing strong in the segment with its reinvigorated GMC Canyon and Chevrolet Colorado. Toyota's Tacoma has outsold others in June and will get an overhaul in 2016. Nissan's Frontier will also get a fresh look for next year.
With all of these players present, it won't be easy for the Ridgeline to attract buyers unless it offers some distinct features and superb mileage. No official details of the new Ridgeline are available yet, but some websites have estimated the price will start from roughly $30,000, which is on the higher side.
Foolish last words
From where Ridgeline sales stand right now (only seven of the vehicles drove out of showrooms in June), it's hard to imagine a turnaround. However, a powerful redesign is known to do wonders. If the all-new Ridgeline catches the fancy of American pickup truck buyers, Honda could be able to eat into the share of the best-sellers and come into its own in the segment.
ICRA Online and Eshna Basu have no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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