Chevrolet is preparing to boldly return to the mid-size pickup truck market with the Chevrolet Colorado (and related GMC Canyon), with the motto “Everything a Truck Should Be.” From one perspective adding Colorado gives the larger Silverado more leeway to move upmarket. From another, sales of Colorado will help GM meet more stringent fleet fuel economy requirements. Either way, the strategy emulates that of Toyota and Nissan (each offering both full-size and mid-size pickups) more than Ford and Ram (full-size only).
Millward Brown Digital uses automotive behavioral analytics to reveal how automakers drive sales using two core elements: demand and conversion. Demand is represented by the number of in-market lower-funnel shoppers; this proprietary measure is based on observed shopping activity across multiple automotive websites and leverages patented data-gathering and normalization processes. A key benefit of this approach is that it leverages the fact that consumers shop on multiple websites and rarely complete all their automotive research in one session; it also avoids false positives (such as those that occur when counting the same person more than once as they visit different sites). The second metric is conversion, which represents an automaker’s success at turning shoppers into buyers, and is similar to a close rate.
2015: Colorado Rear View
There are few mid-size pickups available in the U.S. today: the Nissan Frontier and the Toyota Tacoma. Based on sales realized, Frontier is more important to Nissan than its full-size Titan; Frontier sales were more than three times Titan’s in 2013. Tacoma will outsell the full-size Toyota Tundra as well, but only by 50% in 2013.
The analysis shows that segment sales leader Toyota Tacoma drives its sales with more demand than do Frontier or Colorado. Colorado (2012 shown) drove sales to the same level and using the same tactics as Frontier in 2013 (i.e., they had similar average monthly shopper volumes and similar average monthly conversion rates).
2015 Colorado: Front-View
Next we assess how Colorado could reach future sales targets of 60,000 annual sales (5,ooo/month) and 120,000 annual sales (10,000/month), and combinations of shoppers and conversion that would produce those goals. 60,000 is about twice the Colorado annual average 2009-2012. 100,000 is near its recent high of 94,000 in 2006, thought still about 25% below Tacoma’s 2013 total. For each sales target, we use three different conversion rates; the lower the conversion rate the more shoppers are needed to reach a given sales goal. The first conversion rate (25%) is the average of the set over the past two years. The second (18%) is Colorado’s 2012 conversion rate. The third (27%) is the best-in-study level—Tacoma in 2013. Because 18% is the lowest, that scenario requires the most shoppers.
The results indicate Colorado would need at least 18,560 shoppers per month, on average, to reach 5,000 sales per month. For 10,000 sales it would need an average of 37,120 shoppers per month. Both those require that Chevrolet convert Colorado shoppers to buyers as efficiently as Toyota does Tacoma shoppers. If Colorado conversion is like the old model, it will need 27,694/55,388 shoppers per month on average. Of course, conversion can always be “encouraged” with things like incentives, but that reduces margins.
2015 Colorado: Charting a Course
For a “domestic” OEM, GM’s two-pickup strategy is unique. With the two GMC pickups (Canyon and Sierra), GM will actually be offering four pickups. GM is counting on the smaller models for several things: generating profits, growing market share, and helping to cost-effectively lower its CAFE results. In this analysis we’ve shared a framework for how to optimize Colorado sales success, but there’s more payload to add:
- Refine scenarios using actual Colorado retail sales goals
- Repeat the process at the monthly level, using actual retail sales by month, and shoppers and conversion needed to support those (called “Roadmaps”)
- Factor in timing of and amount of ad support, typical shoppers and conversion launch patterns and seasonal patterns
- Compare actual shoppers and conversion against Roadmap levels as the launch matures to inform marketing adjustments during and after launch to best set the stage for reaching sales goals
- Set expectations for within-brand cross-shopping for Colorado and Silverado; some is expected but the less cross-shopping there is, the more Colorado and Silverado are reaching distinct pools of shoppers
- Compare historic Colorado/Silverado cross-shop and shared shoppers
- Do the same for the sister models (GMC Canyon/Sierra)
- Benchmark against Frontier/Titan and Tacoma/Tundra cross-shopping
- Evaluate the extent to which Ford and Dodge target Colorado and the success of those efforts
- Best case: Colorado demand stays high and Colorado shoppers cross-shop rivals very little (so very focused shoppers)
- Worst case: Colorado demand is too low and shoppers of rival trucks are not shopping Colorado (i.e., shoppers that should be shopping both are shopping the rival only)
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From Chevrolet.com, Colorado homepage, December 31, 2013
CAFE: Corporate Average Fuel Economy
Lincoln Merrihew is the Senior Vice President of Transportation at Millward Brown Digital. At Millward Brown Digital, Lincoln is responsible for steering the Transportation Team, which encompasses the automotive and travel practices. Before Lincoln joined the Millward Brown Digital team, he worked at TNS Custom leading the Automotive team, and then continued on there to lead business development for 10 different industry verticals. Lincoln's career aspiration is to create game-changing solutions and insights. Connect with Lincoln on LinkedIn.