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RISING STAR: The new Ram truck is carving a larger share out of the pickup market, including overtaking the Chevy brand. New styling, tech-focused interior are making a difference.

Pickup market sees share shift as one brand rises

Ram sales overtake Chevy in highly competitive market; brand loyalty may be shifting for some

By David Welch, Gabrielle Coppola and Kyle Lahucik

Pickup owners are typically as loyal as they come, but every so often a hot new truck or big enough bargain can entice die-hards to switch their rigs. Such is the case with Fred Hufnagel, who logged 14,000 miles in New York’s Catskill Mountains in his two-year-old Chevrolet Silverado before trading it in for a Ram 1500 last month.

Hufnagel looked at a new Ram on the advice of a friend and liked what he saw: a comfy cabin, sunroof and brawny Hemi engine. When a dealer gave him $30,000 to trade in his Silverado, he drove off with the new Ram and hasn’t looked back. “I liked the sound of Hemis,” Hufnagel says. “They’re pretty much the same truck, but better.”

Not long ago, the thought of perennially third-ranked Fiat Chrysler Automobiles NV passing Chevrolet in full-size pickup sales was unthinkable. But it happened in the first half after several years of steady market share gains by Ram. General Motors Co. still has more total truck sales because of its GMC brand, but Fiat Chrysler is closing in. Just ask pickup king Ford Motor Co., which referred to a “very competitive” pickup market when it reported slippage in F-Series sales Wednesday.

“Ram has really come up,” said Jim Hardick, a co-owner of the Moritz group of dealerships that sells both brands in Fort Worth, Texas, the heart of pickup country. “Our sales of Silverado are dead-even with last year, but with Ram I’m up about 25%.”

Pickups are the lifeblood of Detroit. It’s the one segment where the inroads Asian automakers have made are minuscule, despite the likes of Toyota Motor Corp. and Nissan Motor Co. investing billions in engineering and U.S. production. Light-duty trucks make an estimated $10,000 in profit each, according to Morningstar Inc., compared with about $3,000 for a small crossover SUV. With 2.4 million sold in the U.S. last year, that’s almost $24 billion in pretax profit coming Detroit’s way.

Fiat Chrysler attributes Ram’s rally to catchy styling and a posh interior, including the 12-inch touchscreen that adorns the dashboard of higher-end models. GM points to Ram selling a lot of its cheaper Classic trucks, an older model of the Ram that doesn’t have the new looks or technology. In addition, GM spokesman Jim Cain says, Ram is discounting its new truck more than Chevy.

Bargain hunters

So who’s right? Both. Surveys show consumers like the newest Ram’s bold looks and luxurious amenities and consider the styling of the all-new Silverado and GMC Sierra trucks to be tame by comparison. At the same time, Ram has been courting bargain hunters with the Classic and offering cheap leases for the older and new Rams on the company website.

“The nuances of our specific go-to-market strategies have obviously changed and adapted over the past 10 years,” Reid Bigland, head of the Ram brand, said in an emailed statement. “But the great products and great programs have remained, and so far in 2019, continue to pay significant dividends for FCA.”

Fiat Chrysler's 2019 Ram 1500 Limited pickup truck Photographer: Daniel Acker/Bloomberg

Fiat Chrysler said in late June that it will keep making the Classic at least through year-end, by which time GM should have all its plants building its new trucks at full production.

“The high and low strategy seems to be working well,” said Brian Irwin, who leads Accenture’s Industrial Group in North America. “We think other companies will take a serious look at it.”

Both GM and Fiat Chrysler are fighting it out. Chevrolet has been advertising 20% off its new double cab truck, while Ram has dangled a $229 monthly lease on its pricey crew cab model and a dirt-cheap $179 a month offer on the Classic. All in, Ram has been more aggressive with offering deals than Ford or GM, said Jeff Schuster, LMC’s senior vice president of forecasting.

Ford may have extended its market share leadership over GM in the first quarter, but it too faces a threat. The more than 68,000 pickups Ram sold in June is close to the roughly 75,000 units averaged a month this year by F-Series, which is still the top-selling model of any type in the U.S.

“We’re going to compete,” Mark LaNeve, Ford’s U.S. sales chief, said of the automaker’s plan to defend its F-Series turf. “We’re not going to concede any volume or market share to anyone.”

F-Series sales dipped 1.3% in the second quarter and are down 0.6% for the year. Excluding heavy trucks, total deliveries fell 4.5% in the last three months, as SUVs also slumped ahead of introductions of the revamped Explorer and Escape models.

Getting going

GM is still getting plants up and running to build its latest truck, which has limited inventory and made discounts relatively harder to come by. Hardick said his dealership could sell more Silverados if he had a better supply of certain lower-priced trim packages that tend to sell in higher volume.

To maximize profits, GM focused on producing its most expensive model trims as it ramped up output, Chief Executive Officer Mary Barra said in an April investor presentation. Four-door crew cab trucks, which command premiums prices, have crowded out cheaper models. A new crew can sell for $5,800 more than the outgoing model, Barra said.

“We are selling every pickup we can build,” GM President Mark Reuss said in an interview at GM’s truck plant in Flint, Michigan, where the automaker just added 40,000 trucks a year worth of new production capacity. “We just need to get this launch going.”

Last year, more than half of Ram production was of the Classic model, which starts at $27,395 -- almost $6,000 less than the starting price of the all-new Ram. Through April, one-third of Ram production was the Classic, according to researcher LMC Automotive. That played a big role in Ram sales rising 8.4% last year and growing market share from 1.1 percentage points to 22.3%. GM’s share fell a point to 33.6%, LMC said.

Through May, Ram’s share of the truck market rose about 4 percentage points to just over 24%, while GM’s dropped 3 percentage points to 31%. Ford’s best-selling F-Series truck was more stable at 37%, according to LMC.

“Ram’s gains are mostly coming from GM,” Schuster said.

‘Home run’

Chrysler has a history of creating hits from its design studio. The company gave the then Dodge Ram a semi truck-styled face in 1993 and sales quadrupled to more than 400,000 by 1995, creating a true competitor to Ford and GM.

The new Ram is playing a similar game with bold styling while Chevy has hewed to more pragmatic improvements with its latest Silverado, such as extra cargo room and better fuel economy.

“They did the product fundamentally right,” Accenture’s Irwin said of Ram. “They have a home run.”

The Ram 1500 ranked No. 1 in interior layout and No. 2 in technology, exterior styling and ruggedness among all non-luxury vehicles -- not just trucks -- in Kelley Blue Book’s analysis of consumer perception for the first quarter. The Silverado didn’t rank in the top three for any attribute in the survey.

That’s what won over Hufnagel, who ditched his Garmin navigation unit thanks to the big touchscreen system in his new Ram. And he loves the pickup’s moon roof.

“This thing’s a luxury truck,” Hufnagel said. “When you sit in it, it’s like sitting in a rocket ship.

--With assistance from Melinda Grenier and Keith Naughton.

To contact the reporters on this story:
David Welch in Southfield at dwelch12@bloomberg.net; Gabrielle Coppola in New York at gcoppola@bloomberg.net; Kyle Lahucik in Southfield at klahucik3@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net; Chester Dawson

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