By Adrienne Roberts and Mike Colias
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 20, 2019).
The growing popularity of Fiat Chrysler Automobiles NV's Ram
pickup truck is pushing the car maker's Detroit rivals to defend
their positions in a highly profitable corner of the auto
market.
Ford Motor Co. and General Motors Co. have long occupied the top
two spots selling large pickup trucks in the U.S. Ram lagged behind
in third place, but has recently started gaining on its larger
rivals by packing its latest trucks with new technology and more
luxurious interiors. It also is attracting many first-time buyers
with showroom rebates, dealers and analysts say.
Ram overtook its chief competitor, the Chevy Silverado, in
full-size pickup truck sales for the first time in the first
quarter of 2019, according to GM and Fiat Chrysler. Ram's full-size
truck sales increased 7% last year to 537,000, while Chevy
Silverado sales remained flat.
GM, which sold roughly 800,000 big pickups last year, still tops
Fiat Chrysler in overall truck sales, because it sells a second
full-size truck model, the GMC Sierra. Ford remains in the lead,
selling about 900,000 big pickups last year.
"Ram has definitely stepped up their game particularly on the
inside of the truck," said Sam Soroka, a 34-year-old account
manager in Potomac, Md., who recently leased a new 2019 Ram 1500
truck. "It feels like I'm in a Mercedes."
Mr. Soroka said he hadn't been interested in a Ram until he saw
his friend's 1500 pickup model last fall and decided to get his
own. It is his first truck.
According to some analysts, Ram has taken the unusual step of
offering substantial discounts on a brand-new truck, which could
help entice loyal buyers to switch brands but also cuts into the
company's profits on the vehicle.
"Ram is the most aggressive right now with rebates while GM has
backed off in the first quarter," said Adam Kraushaar, president of
Lester Glenn Auto Group, which sells GM, Ford and Fiat Chrysler
vehicles in New Jersey.
For instance, Fiat Chrysler offered an average discount of
$5,900 on its new Ram 1500 in the first quarter, compared with
$5,000 that GM offered for the recently redesigned Chevy Silverado,
according to data from Edmunds.com.
Large pickups are huge profit generators for the Detroit car
makers, fueling the bulk of their global profits. Analysts estimate
the companies make about $10,000 from each sale of a large
pickup-truck.
Truck buyers tend to be fiercely loyal to one brand, making it a
challenge for rivals to take market share. Ram has been able to
lure buyers from competitors and attract first-timers with an
interior that looks more like a luxury sport-utility vehicle than a
work truck, analysts and buyers say.
Those gains are helping Ram's Italian-American parent company
offset weaknesses in other brands and overseas. Ram was the only
Fiat Chrysler brand to increase U.S. sales in the first quarter of
2019. Executives credited the brand's strong performance with
counteracting otherwise poor sales in North America, where
operating profit dropped 11%.
A redesigned Ram 1500 pickup that arrived in dealerships last
year is helping. The brand's share of the full-size truck market
climbed to 23% in the first quarter, up from 22% at the end of 2018
and 21% in 2017, according to company sales reports.
In contrast, GM's share of large pickup sales dropped to 30% in
the first quarter this year, down from 33% at the end of last year,
the company-provided data shows. Ford's share rose 3 percentage
points to 41% in that same period, but analysts say it has had to
deepen discounts on its top-selling F-150 truck to hold on.
Jim Morrison, Ram's chief in North America, said the company
packed the new Ram truck with premium materials and technology,
like an optional 12-inch touch-screen right control panel. "We were
overcompensating for something, for sure," Mr. Morrison said in an
interview. He declined to comment on Ram's truck discounts or
competitors.
Some car reviewers have lauded the Ram's new interior, while
panning the cabin of the Chevy Silverado as less posh.
GM President Mark Reuss said in an interview, "We know our
customers love the interior of the truck. This is not over. We play
for the long term."
Executives at GM have said they are prioritizing higher prices
over simply boosting sales, which is why the company has held the
line on discounts. The average price paid for new versions of GM's
Chevy Silverado and GMC Sierra full-size pickups was about $48,000
in the first quarter, 20% higher than the price paid for older
models sold a year earlier, the company has said.
Ford, meanwhile, has deepened discounts on its top-selling
F-150, one of the oldest pickup trucks on the market, partly to
fend off the competition, analysts say. Average company spending on
sales incentives for that model was $6,300 in the first quarter, up
from $5,800 last year and about $400 more than Fiat Chrysler's
incentives for the Ram truck, according to Edmunds.com.
A Ford spokesman said Ford continues to widen its lead while Ram
and Chevy battle for second place. Strong pickup-truck pricing
helped power profits in the first quarter, Ford executives have
said, and next year, the F-150 truck will get a redesign -- its
first in six years.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com and Mike
Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
May 20, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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