How the 2014 Ram 1500 Stepped Up Big to Beat Chevy's Silverado
Good news for Fiat Chrysler in the all-important pickup wars: Its Ram full-sized pickup line outsold the Chevy Silverado in March.
Sales of the Ram rose 26% to the Silverado's 6.8% gain -- enough for the Ram to out-sell Chevy's trucks by 285 units.
It's a small victory for Chrysler, but it's an important one: It's the first time that its pickups have outsold Chevy in almost 15 years.
Better yet for Chrysler: With Ford's market-leading F-Series up just 5%, the Ram gained market share at Ford's expense, too.
How to gain share in the pickup market
Chrysler's not-so-secret strategy to gain a bigger share of the pickup market has two key parts:
Part one: Offer a good truck. The latest Ram has received lots of critical praise for its capabilities -- and its surprisingly comfortable ride. Like other Chrysler products, its interior and overall fit and finish are miles ahead of what the smallest of the Once-Big Three was offering just a few years ago. In particular, the Ram test-drives very well, which has probably gained Chrysler quite a few sales.
Part two: Offer a great deal.General Motors spokesman Jim Cain snarked Chrysler's approach to boosting sales this past week. As Cain told Automotive News, "It's really easy to deeply discount your truck, mine the subprime market and offer cheap lease deals to buy market share." It's uncharitable, but it's a fair description of Chrysler's approach.
And it may or may not be easy, as GM's Cain said, but it works.
Chrysler has long had a reputation for being more friendly to subprime buyers than the other guys, more willing to work with financing companies to make a deal for a customer who was ready to sign.
And Chrysler's average incentives on the Ram were a lot higher than GM's last month: Even with GM running a big national truck promotion, Chrysler's average of $5,598 per truck was a whopping 46% higher than GM's average payout on the Silverado, according to J.D. Power figures reported by Bloomberg.
It was also considerably higher than Ford's incentives, which have averaged about $4,000 per truck for several months now.
Even with those payouts, Ford's average transaction prices have remained quite high -- and if Ford's recent North American profits are any indication, it's making very good money on the F-150 right now.
It's unclear whether Fiat Chrysler can say the same about its profits on the Ram.
Profits are key to GM's strategy
GM has stuck with relatively stingy incentives on the new Silverado because it has made boosting profits a high priority.
That strategy has been working: GM is selling more higher-priced trucks than it did before. Its average transaction prices have risen significantly over the last year, and have been very close to Ford's in recent months.
But even with all GM has been dealing with lately, it had to sting to fall behind Chrysler last month.
GM stepped it up a bit this past week, boosting incentives on certain versions of the Silverado and extending its "Chevy Truck Month" promotion into April.
That should keep Chevy dealers happy. We'll know in a few weeks whether GM and Fiat Chrysler shareholders will be happy with the profits from this latest price war.
What do you think? Is Chrysler sacrificing profits for market share? Or is it just taking advantage of a difficult time for GM? Scroll down to leave a comment and let me know.
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The article How the 2014 Ram 1500 Stepped Up Big to Beat Chevy's Silverado originally appeared on Fool.com.John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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