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Ram Truck Sales Bolstering Chrysler Group Profits

Brand making inroads in full-size pickup segment.

by on Oct.31, 2014

The Ram 1500 EcoDiesel is the brand's fastest-selling model. Ram is gobbling up marketshare in the full-size pickup segment.

The battle for pickup truck supremacy is getting more intense and Ram is enjoying a run that is not only gaining it a larger marketshare, but also a major contribution to Chrysler Group’s bottom line.

While Ram is still No. 3 on the list of full-size truck sales, it’s an active player in the segment and, perhaps more importantly, the brand’s leadership is ready to jump in and scrap for sales.

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Bob Hegbloom, the new head of the Ram brand, said during a luncheon meeting with reporters that he was both surprised and disappointed with the Chrysler Group’s showing in the Consumer Reports annual quality survey, adding the company was moving to fix the problems cited by he influential magazine.

But Hegbloom also noted in a dig at Ram’s competition that he has yet to detect anyone  clamoring for an aluminum truck like Ford is preparing to launch. He also noted that while he’s watching the launch of the General Motors’ new midsized trucks, the 2015 Chevrolet Colorado and GMC Canyon, but the company hasn’t been able to build a business case that supports a midsized truck.

Although GM is touting the compact size of its new trucks, the Canyon and the Colorado are large vehicles that aren’t any more fuel efficient that a Ram 1500, he said. If you were going to build a midsized truck you would want it to get more than 30 miles per gallon. The new GMC Canyon with a 2.5-liter four-cylinder engine gets 27 mpg.

“People expect a midsized truck to get over 30 miles per gallon,” he said.

The launch of the all aluminum Ford F-150 also represents another interesting experiment and an effort to offer consumers better fuel economy, he said. But there are also questions.

“Whose ever asked for an aluminum truck?” he said. In addition, surveys also indicate that consumers believe that they are safer in a steel truck, Hegbloom said.

“They believe steel doors will protect them better,” added Hegbloom, who emphasized that Ram is quite willing to utilize aluminum and other material to help reduce the weight of its future trucks.

(Chrysler, Ford recall more than 700,000 vehicles. For more, Click Here.)

The intensive use of aluminum will reduce the weight of the F-150 by 700 pounds. But the F-150 was a heavy truck and even after the changeover, the F-150 will weigh only about 300 pounds less than the current Ram 1500.

Ram is also increasing its use of diesel engines, which offer greater fuel efficiency, he said. The Ram 1500 with a diesel is the fastest turning vehicle in the Ram line, he noted.

Meanwhile, Ram is also continuing to capture more GM and Ford truck customers than it loses to competitors in the pickup truck segment.

Ram’s second “Conquest-to-Defection” ratio was 1.3 for Chevrolet and 1.5 for Ford, which means Ram gained ground on both of its competitors since for every defection to Chevrolet it got 1.3 customers from Chevy and for every defection to Ford it got 1.5 former F-150 customers.

(Click Here for details about the debut of the Cadillac ATS-V in L.A. next month.)

The success of the Ram brand has helped lift Chrysler’s overall financial results.

Since the Ram brand was introduced in 2009, it has steadily increased the number of trucks sold with price tags of more than $40,000.

The figures show that in 2009 only 29% of Ram 1500s sold for more than $40,000. That number is now 53%: an 87% increase, Hegbloom said. In addition, Ram 1500 in 2009 had only 1% of sales over $50,000 and now 11% of the sales are over $50,000.

(To see more about Porsche’s high-priced Panamera Exclusive Series, Click Here.)

The same trend prevails with the heavy-duty trucks. The Ram 2500 mix of $50,000-plus has risen from 16% of sales in 2009 to 51% now, which is a 215% increase. The Ram 2500 in 2009 only had 1%  sales over $60,000 and now 21% of the sales are more than $60,000.

The Ram 3500 in 2009 had 46% of sales over $50,000 and now 85% of the sales are over $50,000, which nearly double the number from 2009. Ram 3500 in 2009 only had 2% of sales over $60,000 and now 41% of the sales are over $60,000.

Like GM and Ford, Hegbloom also said Chrysler and Ram still face challenges, in particular meeting tougher fuel-economy standards scheduled to take effect in 2025. The regulations could spell the end of 5.7-liter Hemi, but the performance of the smaller engines has improved to point where customers should be able to get more capability and better fuel economy.

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