Without actually confirming the price, General Motors Co. (NYSE: GM) truck marketing chief Sandor Piszar made the company’s position on a $100,000 Chevy Silverado pickup crystal clear: “People want to trade up. It customers want a more expensive truck … we’ll deliver it.”
In September of 2017, Ford Motor Co. (NYSE: F) launched a Super Duty F-450 pickup that carried a base price of $87,100. Selecting every available option drove the price to around $95,000 and a couple of years of additional markups has pushed the high-end price to around $97,000.
GM is expected to counter with its 2020 Silverado HD with the High Country trim package. While the company has not specified actually pricing, it figures that a top-of-the-line luxury pickup will ring in with a price of $100,000 when fully loaded.
That’s an awful lot of money for a truck, but J.D. Power reports that the industry average price for a pickup in the first five months of 2019 was $45,260. At that price, Ford, GM and Fiat Chrysler Automobiles N.V. (NYSE: FCAU) make a gross profit of about $10,000 on every pickup they sell.
Doubling the price may not double the profit, but it could according to industry analyst Joe Phillipi, who told CNBC that “a Silverado High Country or a GMC Sierra can get over $20,000” in gross profit. The downside risk of offering a fully tricked out pickup for $100,000 is low and the potential payoff is high.
In some ways, it’s surprising that it has taken this long for pickups to catch up with sport utility vehicles. We’re not talking here about the premium brands like Rolls-Royce, Bentley or Lamborghini that sell SUVs costing more than $200,000. A fully loaded BMW X5 M compact SUV costs more than $120,000, and a Mercedes-Benz G550 goes for more than $140,000.
High-dollar pickup truck buyers tend to fall into one of two groups: people who need a serious work truck and people who want a vehicle to haul or tow stuff that matches their lifestyle. People who spend a lot of their work time in their trucks want the bells and whistles that make the daily grind a little more comfortable. Lifestyle buyers, IHS analyst Stephanie Brinley told CNBC, are willing to spend even more: “When people are towing things that can cost several times more than the truck, they’re willing to spend the money.”