In the midst of one the worst economic collapse in U.S. history, GM executives culled all sorts of different products and brands from their lineup including the funky, mid-gate Chevy Avalanche. With the economy rebounding, trucks and SUV sales booming and the changing nature of pickup trucks, it is time for Chevy to bring back the Avalanche. Here are my top 5 reasons why.
1. The Business Case is Good for an Avalanche
First and foremost, when discussing future product development, you have to start with the business case. Automakers, like GM, aren’t in business to lose money and developing a dud product is just not something they do.
When developing a new product, you have to take into account first the platform it will be riding on. In the case of the Avalanche, this is easy. It used an existing platform of the popular Suburban/Yukon XL. It can also use the existing powertrains, styling and latest technology of the GM SUVs.
Next, you have to consider manufacturing space. Since 2009, when the Silao, Mexico and Janesville, WI plants closed, the Arlington Assembly plant has built all Chevrolet Tahoes, GMC Yukons and Chevrolet Suburbans in Arlington, Texas. This plant occupies 4.375 million sq. ft. on 250 acres and impressively has been open since 1954. Currently it is running three shifts and is building about 1,200 vehicles each day. This makes its public production capacity of about 270k a year.
Looking at sales for all GM full-size SUVs, they have combined to sell around 143k units through August. With just four months left, it seems like, on paper, the Arlington assembly plant will come in at a little below capacity (22,500 per month capacity, 17,875 current pace). This sales year plus the unknown extra capacity each plant is capable of producing, the numbers show there is capacity for GM to build a new 2018 Chevy Avalanche.
2. The Market Has Changed
When GM discontinued the Chevy Avalanche in the 2013 model year, the market was clearly clamoring for smaller vehicles and the 2009 economic collapse and subsequent bankruptcy spelled the Avalanche’s doom. Plus, diminishing sales of 16,986 units in its final year that finished off a downward trend of sales barely exceeding 20k for 5 straight years didn’t help. And rampant unemployment, high gas prices and market trends worked against the truck. Finally, the EPA issued their new Corporate Average Fuel Economy regulations in May, 2009 calling for improved fuel economy targets to rise above 35.5 MPG.
All of these items painted a dark future for trucks and SUVs. Many analysts thought new EV and hybrid vehicles were the future. In fact, Chevy unveiled a new Hybrid version of the Tahoe in 2007 and was pushing more fuel efficiency. This was the market at that time.
Things have dramatically changed. Now, the Chevy Tahoe hybrid has been discontinued, EV sales haven’t really amounted to much and trucks, SUVs and mid-size trucks even has seen a rebirth. The sales numbers reflect this trend with GM’s latest August, 2016 deliveries report showing Chevrolet having 6 vehicles showing sales growth over the prior year including the Suburban, Colorado, Express van and Tahoe. GMC sales show the same with 4 vehicles showing sales growth – Canyon, Sierra, Yukon and Yukon XL.
With the top growth sectors being trucks and SUVs, the timing is right for GM to expand its offerings in this segment. Business is all about timing and the time is now.
3. Versatility Is Hot Right Now
Why do trucks and SUVs continue to sell well while EV and small cars are posting small growth numbers? Simple. Versatility is hot right now. The American consumer sees those small cars and EVs as great commuter vehicles to get back and forth to work.
When it comes to family vehicles, many want more cargo room. The EVs with their batteries and hybrids also with batteries, restrict the amount of cargo room you can have. This makes it difficult for consumers who want both an EV and cargo room.
These consumers make a choice then between fuel economy and cargo space. With you have a family of 3, 4 or 5+ it isn’t a tough choice. You want the room.
4. Fuel Economy Is Much Improved
Remember when you were doing good if you truck got 12 MPG? Now days, trucks and SUVs are easily getting over 20 miles to the gallon and gas prices have been holding at around $2 a gallon for some time. Plus, there has never been a better time for consumers who want flexibility in their fuel economy and powertrain choices with diesel and hybrid powertrain options.
For example, the Chevy Colorado has a diesel. The new EcoTec3 engines from GM offer better fuel economy than their predecessors thanks to direct injection, piston cooling jets, active fuel management, variable displacement oil pump, continuously variable timing and aluminum cylinder heads and blocks. Simply put, this new generation engine can produce much more power for less fuel. How much better?
The latest generation of GM’s small block engines came out in 2013 and the 5.3L V8 is used in the 2014 Chevrolet Suburban (6.2L for Yukon XL). This SUV produces 355 HP (up from 320 HP) and 383 lb-ft of torque (up from 335 lb-ft) while returning 16/23/18 city/highway/combined MPG in 2WD and 15/22/18 city/highway/combined in 4WD. The 2013 Chevrolet Suburban was EPA-estimated at 15/21/17 city/highway/combined for 2WD. Now take these engine improvements and combine it with a new 10-speed transmission GM and Ford have been working on together and you could feasibly see a mid 20’s highway fuel economy number out of a large SUV.
5. New Vehicle Pricing Axioms Have Changed
Back 10 or even 15 years ago, vehicle pricing was largely held to an axiom that people won’t pay for features if they don’t find it immediately useful and this was especially the case with trucks and SUVs. These were the “people-hauler” vehicles and luxury touches were not the norm. Instead, they were often offered in bare bones with roll-up windows to keep price down.
Flash forward to present and GM is planning to offer a GMC Canyon Denali. Yep, a $50k mid-size truck. My how things have changed. This would have been completely unthinkable a decade ago.
Why bring this up? Profit is a big deal to GM and company executives have publicly stated they aren’t trying to buy market share anymore, they are trying to make money. If this is the case, can you imagine what a 2018 Chevrolet Avalanche Denali would do to the marketplace? It could easily top $60k and would be loaded with profit for GM considering they could use existing technology, platforms and powertrain to build it. Plus, old customers would come out of the woodwork for it much like they are for the new Honda Ridgeline. It could easily hit the 20k unit mark and might even surpass the old sales high of 93k units.
Whether GM reacts quickly enough to the changing market to produce a 2018 model is pretty unlikely. However, they could do it much sooner than other manufactures. They have the knowledge, the engineering, the production facility and a consumer base hungry for its return. These all add up to a winner in my book.