Renault, Mercedes, Fiat give new life to pickup segment

Given the vehicles Europeans typically drive, pickups should be too large, too thirsty and too unrefined to gain any traction in the region. So why are Europe's automakers piling into the midsize pickup sector?

Renault, Fiat, Mercedes-Benz and, further into the future, PSA Group are all launching vehicles to take on current market leader Ford in a sector that has been traditionally dominated by the Japanese.

The European pickup market is still relatively small. In the first half 80,300 were sold across Europe, a third of which went to customers in the UK, the region's largest pickup market, according to data from market analysts JATO Dynamics.

In Germany, more than 10,000 pickups were sold and the third-biggest market, France, took 9,450.

These are minuscule numbers compared with the U.S., where 1.1 million full-size and 216,194 midsize pickups were sold over the same period, according to the Automotive News data center.

European sales, however, are growing. In the first half, midsize pickup sales were up 19 percent, and next year the sector is expected to be above 200,000 for the first time, more than double 2012's volume, according to predictions from analyst firm LMC Automotive.

That growth is partly a function of the new model surge, said Andy Barratt, managing director of Ford in the UK. "Where there is more competition coming in, it grows the market as well. There's still more growth to come," he told Automotive News Europe.

The newcomers are also expected to spark interest in the idea of owning a pickup in new parts of Europe.

"Many of these have a strong local presence and can lean on large brand recognition," said Ian Fletcher, principal analyst at IHS Markit. That means the new Renault Alaskan could expand French sales; the Fiat Fullback, Italian sales; and the Mercedes X class, German sales.

Renault's product director of pickups, Anton Lysyy, said: "Many buyers do not know that pickups exist. When a big company such as Renault enters the market, people will start to get to know these kinds of cars."

Lured by towing power

In Europe, pickups traditionally have been bought for commercial use, but customers are now starting to see them more as a leisure vehicle.

"We have seen a shift in the market," Lysyy said. "One of the reasons is usage. Previously people used large, body-on-frame SUVs to tow boats or horse trailers. Nowadays, with high regulations and pressure [to move to] small engines with dual-clutch automatic gearboxes, it's not really possible to use SUVs to tow. People with these hobbies need to have a truck."

Alternatives are hard to come by. When Land Rover axed the long-running Defender last year, sales of the Ford Ranger soared in the UK as Land Rover's traditional customers switched to the only viable alternative – an off-road capable, double-cab pickup.

The desire for pickups with more refinement is highlighted by the type of models that are being bought. Sales of the top-of-the-range Ford Ranger Wildtrak double-cab accounted for more than half of the pickup's sales in Europe in the first nine months, Ford said.

In the UK, the Wildtrak costs 32,514 pounds (in Germany it starts at 42,453 euros). That’s not the most expensive pickup in Europe's second-largest market. The owner of that title is the top-spec Volkswagen Amarok, which costs 39,427 pounds (in Germany it starts at 55,399 euros).

Lots of extras

Then there are extras on top. Options such as hardtops, bed liners, styling bars and towbars are a key revenue stream for automakers, whose regular commercial vehicle customers are a lot more frugal.

"We expect accessories to be an important part of the business," Renault's Lysyy said.

The vehicles might be based on decades-old body-on-frame chassis technology, but the equipment inside the cabs is very much up-to-date. The Ford Ranger can be equipped with radar-based adaptive cruise control and Ford's latest Sync 3 infotainment system.

The Mitsubishi L200 can be bought with a rearview camera and lane-departure warning, while the Nissan Navara has the option of automatic emergency braking and hill descent control.

One of the clearest indicators that the market is changing is the arrival of a premium manufacturer: namely, Mercedes with the X class. The automaker believes that the pickup is traveling down the same path to respectability as the SUV.

"Twenty years ago, SUVs were these robust, rustic-looking boxes like the [Mercedes] G class," Volker Mornhinweg, head of Mercedes-Benz Vans said. "Now they are elegant lifestyle products with a high-quality finish to them. Which customer takes them into the wilderness anymore? We believe pickups could go in a similar direction."

That fact that the European pickup market is relatively small is not a concern. Europe is just one target market for Mercedes, Renault and PSA, which declared in September it will develop a new midsize pickup with China's Changan Automobile that will be sold in China and other global markets starting in 2020.

2.5 million and growing

On announcing the new truck, PSA pointed out that the midsize pickup (also known as the one-ton pickup because of its payload) represents 18 percent of the light commercial vehicle market globally, which is about 2.5 million vehicles. Mercedes believes that figure will grow by another million in the next 10 years.

In some markets in South America, Southeast Asia and the Middle East, pickups are often more popular than passenger cars.

In South Africa, where Ford builds the Ranger for Europe, the Toyota Hilux was the market's best-seller through July, according to data from sales aggregator Bestsellingcarsblog.com. In Thailand, where Mitsubishi builds its L200 as well as the Fiat Fullback for Europe, pickups occupied the top three spots in the country's ranking of top-sellers through August, led by the Isuzu D-Max.

Mercedes and Renault plan to build the X class and Alaskan for South American markets at Renault's plant in Argentina, where Renault already sells the successful Duster Oroch double-cab compact pickup.

"Having a midsize pickup is a good way for a manufacturer to improve its presence in key growing markets," said Felipe Munoz, global analyst for JATO Dynamics.

For Mercedes, a pickup was the perfect vehicle to expand its commercial presence outside of Europe. "From the very beginning, we were interested specifically in a product we could sell around the world," Mornhinweg said.

If launching a pickup doesn't work out for the new players, it will have been a low-risk bet, believes IHS's Fletcher. Both the Renault Alaskan and Mercedes X class are based on the Nissan Navara NP300 model, and both are built at Nissan's factory in Barcelona, Spain, for Europe, while Fiat's Fullback is a restyled Mitsubishi L200.

Collaboration in this sector isn't new. Ford and Mazda have a pickup partnership in Thailand, while the Isuzu D-Max is closely related to the Chevrolet Colorado sold in the U.S.

"This piggy-backing allows automakers to broaden their lineups at a fraction of the costs and risk than if they were to do this independently," Fletcher said. "It's something of an opportunistic move."

Christiaan Hetzner and Peter Sigal contributed to this report