Why Chrysler’s Ram Is Winning the Pickup War
Filed under: Company News, Earnings, Automotive Industry, Ford, Investing
The hottest pickup truck in America has lately been Fiat Chrysler’s (FIATY) Ram. Sales of the Ram have been on an absolute tear. A 30 percent year-over-year jump in September puts the Ram up 22 percent for the year — and that’s on top of a very strong (up 21 percent) 2013.
Meanwhile, General Motors’ (GM) Chevy Silverado is up just 5.9 percent in 2014 — and Ford’s (F) vaunted F-Series is down 0.4 percent this year.
Ford Lost Production Time
The first reason for Chrysler’s success is that, right now, longtime pickup king Ford is dealing with a supply issue. The Blue Oval is changing over its two truck factories to make the 2015 F-150, which features an industry first: aluminum body panels. Setting up Ford’s factories to make the aluminum-bodied truck is a complicated process that will result in 12 weeks of downtime at each plant, costing Ford 90,000 units of production. As a result, Ford has been relatively stingy with discounts — deliberately holding back sales — because it doesn’t want its dealers to run out of 2014-model trucks before the 2015s arrive.
That move was expected to give a boost to Ford’s rivals, albeit a temporary one. But what has been a surprise is that Chrysler has seized a disproportionate slice of that bonus market share.
After all, GM’s full-size pickups, the Chevy Silverado and GMC Sierra, were all-new for 2014 — and generally speaking, the newest product in a segment is the one that shines.
Generous Incentives from Chrysler
Chrysler has been generous with incentives on the Ram. GM boosted its payouts in September, but Chrysler’s average incentives on the Ram in August were almost $1,000 higher than GM’s on the Silverado — and both are well ahead of Ford’s.
But looking past temporary advantages, there’s a third factor: The Ram is a well-regarded truck.
The Ram Is Highly Rated
Chrysler’s products have not typically been best-in-class when they’re first released. But in recent years, the company has become very good at honing them over time.
The current Ram started out as a good pickup, and over the last several years, it has become a very good pickup. With a rear suspension design that features coil springs instead of leaf springs, the Ram has been widely hailed for having the smoothest, most car-like ride of the Detroit Three’s pickups.
Chrysler has built on that selling point, adding a high-tech eight-speed automatic transmission that gave the Ram significant improvements in fuel economy and a refreshed interior that uses high-quality materials and incorporates more high-tech touches.
The Ram 1500 won Motor Trend’s Truck of the Year award in 2013 and 2014 — beating out the all-new GM trucks last year. The Ram is also Consumer Reports’ top-rated full-size pickup, ahead of those new GM trucks and Ford’s F-150 — and Toyota (TM) and Nissan (NSANY), too.
Consumer Reports has often been hard on Chrysler’s products in the past. But the magazine has lavished praise on the Ram, calling it “the most civilized full-sized pickup on sale,” and praising its smooth ride and quiet, luxurious interior.
The Ram’s Fuel-Economy Trump Card
Last winter, Chrysler added a surprise: An optional three-liter diesel V6, dubbed “EcoDiesel.” It’s the only diesel currently offered in a “light duty” pickup in the U.S.; the F-150 and Silverado 1500 have nothing comparable.
That diesel engine gave the Ram the fuel-economy crown: An EPA-rated 28 miles per gallon on the highway, tops among full-size pickups. And it may hang on to that title: Despite the big improvements coming on the 2015 F-150, Ford is hinting that it might not beat the Ram EcoDiesel’s highway fuel economy.
With a price premium of $4,000, the diesel isn’t a cheap option. But it has proven so popular that Chrysler is doubling production, it said last week. Diesels will now account for 20 percent of Ram 1500 production at Chrysler’s main truck factory in Warren, Michigan, up from 10 percent. That could help keep the Ram’s string of monthly sales gains going for a while longer.
Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. Find out the easy way for investors to ride the new mega-trend in the automotive industry in our free report.
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