This Is What Fiat S.p.A. Is Doing to the Ram Pickups

A 2014 Ram 1500 with the new EcoDiesel power train, launched earlier this year. The diesel-powered Ram 1500 comes with an EPA rating of 28 miles per gallon on the highway. Source: Fiat Chrysler

On May 5, senior executives at Fiat Chrysler Automobiles  (NASDAQOTH: FIATY  ) spent a full day briefing analysts and media on the company's plans for the next five years.

This is a big deal. Newly merged FCA's global product portfolio is currently a messy mash-up, with many areas of overlap -- and several important market segments where the company has no strong offerings at present.

This plan is CEO Sergio Marchionne's road map for changing that. If it's successful. FCA will be transformed into a thriving, competitive, substantially more profitable global automaker.

But that's a big "if." The plan is ambitious and expensive, and FCA is not exactly rolling in cash at the moment. There are reasons to be optimistic, though, starting with this: Marchionne's last five-year plan was also seen as overly ambitious -- but Fiat and Chrysler largely delivered on its goals.

I recently outlined the whole plan and summed up how it will affect each of FCA's brands. Since then, I've been going into more detail on FCA's plans for each of its brands, taking a closer look at the products, strategies, and expansions that the company plans to put in place over the next five years.

Last week I talked about FCA's plans to take Jeep to new markets around the world, to make Chrysler a mainstream American brand built around the all-new 200 sedan, and to emphasize high performance at Dodge in an attempt to win younger buyers. In this video, I explain what FCA has in store for one of its most profitable brands, the Ram truck lineup.

A transcript of the video is below.

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John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for fool dot com. Last week, the newly merged company that will be called Fiat Chrysler Automobiles revealed its five-year plan. It's an interesting, ambitious plan that -- if it works -- will take FCA, as we're calling them, to 7 million sales a year by 2018.

There are a lot of moving parts to this plan, and they spent a full day last week going through it brand by brand. One of the things I want to touch on is their plan for the Ram brand.

You probably know that Ram used to be just the name of Dodge's pickup truck, but it was separated from the Dodge brand in 2009 and made a stand-alone truck brand. And it has been on a roll since then, its U.S. market share has gone from 11.1 percent at the end of 2009 to 21.7 percent at the end of the first quarter of 2014.

That's a big jump, and to be clear a lot of that gain has come at General Motors'  (NYSE: GM  ) expense while Ford's share has been pretty flat over that time, and it has happened in large part because the Ram pickups have seen some big improvements over the last few years.

And the demographics of the customers that the Ram has been drawing are interesting. In his presentation last week, Ram brand chief Reid Bigland said that the average age of a Ram customer was 52, with a household income of $91,000 dollars, compared to Ford's  (NYSE: F  ) at age 58 and $85,000 dollars and GM's at age 59 and $77,000 dollars. Ram buyers are younger and more affluent than buyers of Ford and GM pickups, and that's something they'll want to build on.

And he also showed a slide that emphasized that Ram is stealing customers from GM, looking at something called the "conquest to defection ratio". Here's what that means: If you trade in your Chevy pickup on a Ram, from Chrysler's perspective you're a "conquest" and from GM's perspective you're a "defector". Over the last couple of years, Ram's ratio versus Ford has been basically even -- customers go from Ford to Ram about as often as they go from Ram to Ford.

But with GM, it was 1.31 in 2012 and 1.39 in 2013. In other words, for every three customers giving up a Ram to buy a GM pickup, there were about four going the other way.

That's impressive. It confirms a lot of what we've talked about in the pickup market over the last couple of years, the sense that Ram has been stealing GM customers -- especially, as we've seen recently, at the lower end of the market.

So what is FCA's big five-year plan for Ram? Long story short they're not going to mess with success. They're bringing a couple of Fiat's commercial vans over from Europe to sell here under the Ram brand, they already offer the Ram Promaster van which is a version of the Fiat Ducato, and that will be joined by the Ram Promaster City, which is based on the Fiat Doblo.

From a corporate organizational perspective the Ram brand is being folded together with Fiat's commercial vehicle operation, which is called Fiat Professional. But the Ram pickups aren't going to change much. The Ram 1500 will get refreshed next year, the Heavy Duties will get refreshed in 2016, and then there will be an all-new 1500 in 2017 and new Heavy Duties in 2018.

They are hoping to see total Ram brand sales in North America go from 463,000 last year to 620,000 in 2018, with a lot of that coming from a more aggressive push into commercial fleet sales, with those vans and with commercial versions of the Ram pickups all the way up to a Ram Chassis Cab. So that's the plan for Ram, not a big dramatic change, more a matter of investing in what's already working and building on their recent success. Thanks for watching.


Read/Post Comments (11) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 21, 2014, at 1:22 AM, vinnieboiblue wrote:

    I said when Fiat took over, FORD and GM better watch out. They are known to build small cars in Europe and have a pension for quality gorgeous interiors. Well they did the interior redo on Chrysler products and slowly worked its way with the Dodge Dart and Chrysler 200. They have capitalized on Dodge's reputation on innovation with cubby holes and other small but detailed items. They carried that onto the Ram truck and quality wise, the Ram has caught fire. Consumers see and feel the difference in quality and performance. Now Jeep is also picking up, some commentators laughed at me from other car magazine subscribers. Their eating their words now.

  • Report this Comment On May 21, 2014, at 3:16 AM, cypress555 wrote:

    that's right, pretty soon ram will be second then coming up on ford

  • Report this Comment On May 21, 2014, at 5:28 AM, Bryanbeachboy197 wrote:

    I'm a loyal Dodge/Ram fella (my ever-faithful, ever-reliable '96 Dakota is still my daily driver) so I'm happy to see the brand doing so well. I agree, better interiors and better drive trains are what is killing it for Ram right now. Just keep from making your infotainment systems terrible (lesson learned Ford?) and keep the interiors and exteriors beautiful (too conservative GM?) and sales should continue apace. Rebates and offers are going to be cut back soon, if they haven't been already, so that will slow things down a bit, but the stronger move into the commercial/fleet area will be an easy(ish) way to add growth. At least short term.

    I suggest to Ram though (and this is based from what is probably a throw away comment from Mr Marchionne during the May 5 presentation) that they act now and build a Ram 1000, aka the new Dakota. I understand that small truck sales in North America are basically nil, but if FCA is serious about making all their brands global then surely they will need a small/midsize truck to compete with Toyota, Ford, GM and Nissan world wide.

    Heck, make it available on a "special order only" basis in North America! Perhaps it could even be built on the short wheelbase Ram chassis, since the original Dakota's wheelbase was 123 inches for the 8' bed regular cab, and the current Ram with the six foot bed and regular cab has a wheelbase of 120 inches. That would be some cost savings.

    After that, make a unibody truck [can't call it the Ram 500, Fiat would poo bricks; maybe the Rampage? Remember that? :) ] out of the Fiat Panda, something with a quad cab and a 4 or 5 ft bed and 4wd (which is available on that chassis I believe).

    So, there you go FCA, I've solved it for you!

  • Report this Comment On May 21, 2014, at 8:02 AM, LouisTewl wrote:

    JR, Thanks for your increased coverage of FCA, and a lessening of the previously obvious anti-FCA bias. However, it would be nice if the first half of your last several articles in this current series weren't opening boilerplate copy simply pasted from one story to the next.

    Adding to the reader disappointment from what might be interpreted as a less-than-energetic approach is the repetition of your usual litany of misstatements, casting of aspersions, projections of doubts, etc., etc., etc.,, as if, if you repeat them often enough, investors will a. Accept them as fact, and b. Think you are acting in their best interest and know what you are talking about, none of which, to date, have proven to be true.

    For example, you keep including this creative fallacy in your opening boilerplate copy:

    "Newly merged FCA's global product portfolio is currently a messy mash-up, with many areas of overlap -- and several important market segments where the company has no strong offerings at present."

    I hereby call you out to defend and prove that statement.

    IMO, the current (and pending) model offerings of FCA represent the broadest and most comprehensive offering of any automotive manufacturer on the PLANET, and I DEFY you to name ANY significant market segment where FCA has no strong offerings at present.

    Oh, I suppose you could again trot out one of your latest negative fantasies like the one about how the Dodge Charger is "a muscle car that has to do double duty as a big sedan," along with all your other borderline-idiotic small-minded sniping about all things FCA.

    You STILL have to open every article you write about FCA with some kind of negative bias, and you continually try to create doubt in investors' minds about whether FCA can achieve any of their growth projections, and, frankly, all it serves to (again) show to TMF readers is your provincialism and unprofessional bias.

    Meanwhile, FCA continues to successfully execute in their ongoing plan to become a truly global brand as they meet the requirements and exploit the opportunities of the automotive industry going forward in the 21st century.

    Why won't you accurately communicate that to your readers? Your, and, as your employer, TMF's continued practice of generating negative propatorials re FCA is very disappointing to me as an investor and, I would posit, is costing TMF points with investors and readers in other sectors they purport to cover as well.

    Perhaps it would help if the disclaimer section was put at the top of the page. It would certainly help clear up the confusion.

    Fool On.

  • Report this Comment On May 21, 2014, at 9:39 AM, Grandpastu wrote:

    FIAT. Fix It Again, Tony!

  • Report this Comment On May 21, 2014, at 9:48 AM, A9930thTA wrote:

    Ram is stealing GM sales because they are giving away their garbage. Look at the average incentive for Fiat to move a Ram. Its double that of GM and Ford. Are GM trucks better? Every automobile magazine sure thinks so.

    If you look at the specs the Ram truck is a joke. Coil springs make for a nice smooth ride, but you cannot tow and you have the lowest payload. Even Toyota beats their payload and towing specs. Yes they boast about having a diesel, but even their diesel has lower towing and payload numbers than the gas GM trucks max towing and payload!

    Now lets get into the HD segment here where they boast 30k lbs towing. Its on a regular cab work truck (VINYL INTERIOR), and 4.11 rear axle. TO tow that much you MUST HAVE A CDL LICENSE! How many people will buy that type of truck for HDS applications? FEW!

    When you actually look at a double or crew cab with cloth or leather (the most common HD purchases) for the Ram your towing drops off a cliff and you are beaten by GM and Ford in all towing specs. But your 30,000 lbs drops to around 20k in 5th wheel towing which is 4,000 behind the GM trucks. Tongue towing you cannot beat the GM trucks.

    And last but certainly not least the longest lasting trucks are GM trucks! That's according to sales and how many are lest on the road. GM has a higher percentage still on the roads.

    Ram trucks are just junk and for the citidiot who will never need to use the truth for what its purpose is.

  • Report this Comment On May 21, 2014, at 11:05 AM, LEP72 wrote:

    I have been in construction work for the better part of my 61 years (brickmason) I have owned Ford, Chevy, Nissan and Toyota, but never a Ram not until 2012. A friend brought the Ford Eco-boost about a month after I got my Ram, he carried it back to the dealer with check engine light problems three times in the first six months. I was mainly a Chevy guy until 2012, the problem I always had with the Chevy's were the transmissions and the lack of options. A friend talked me into the Ram and I'm not able to thank him enough Ford, Chevy and the rice burners need to take some notes. Thanks Fiat Chrysler looks like I'm a Ram customer from here on out.

  • Report this Comment On May 21, 2014, at 2:20 PM, LouisTewl wrote:

    @ a99300th/whatever - funny, those comments are almost an exact duplicate of those you posted after a previous TMF article (which I took the time to try to educate you about, item by item,)

    Please refer to that article for a refresher course, because apparently that schooling didn't take.

    And for you, JR, well during the winter quarter of this year, Ford truck sales were flat while Ram sales were up strongly, and all those sales weren't "stolen" from GM, despite you again trying to shadily skew the statistics in favor of Ford, once again demonstrating your pro-Ford/GM, anti-FCA bias.

    The final, very short paragraph at the end of your article is what really tells the story here:

    >"They are hoping to see total Ram brand sales in North America go from 463,000 last year to 620,000 in 2018, with a lot of that coming from a more aggressive push into commercial fleet sales, with those vans and with commercial versions of the Ram pickups all the way up to a Ram Chassis Cab."<

    Notice how JR uses weak words like "hoping"? What he doesn't mention is that Fiat is a major player in global commercial and industrial vehicles and engines manufacturing and supply, with separate companies dedicated to exactly that. They aren't "hoping". They are bringing their decades-long experience, technology, and SUCCESS in this commercial/industrial segment to bear in America, which will flow through to the Ram trucks, helping them to continue to take market share from GM AND Ford.

    JR then goes on to try to MINIMIZE (rather than illuminate) what impact this strategy will have going forward with his final purposefully misleading and inaccurate summary/exit statement:

    >"So that's the plan for Ram, not a big dramatic change, more a matter of investing in what's already working and building on their recent success."<

    Do you see how disingenuous JR is in describing FCA's multi-pronged strategy for their American truck sector? (and this is FCA;s strategy in just ONE segment - they're taking the same approach in every segment they own!)

    JR also uses the phrase "their recent success."

    As much as you do your reading investors as disservice by continually mis-characterizing FCA's progress and strategy, JR, making excuses for Ford during the winter slump by saying the snow kept them from getting trucks shipped, etc., etc., etc., while Ram sales in the very same markets increased substantially, and all the rest of your 'yellow journalism' (look it up), FCA's "recent success" is not a fluke - it's just the earlier stages of how FCA is going continue to grow market share across the entire consumer and commercial/industrial truck sector here in the U.S.

    In your misguided and unethical attempts to keep TMF readers focused on Ford stock, which you and TMF own and are trying to support, your pitiful efforts may, unfortunately, also keep investors from recognizing the implications and true potential of FCA's strategies, so that they miss what may truly be a once-in-a-decade (if not in a generation) investment opportunity in the auto industry of the 21st century.

    You give new meaning to the term 'Fool On', JR, and it's not good. Fool On, but please, stop trying to Fool TMF readers. They deserve to make money too.

  • Report this Comment On May 21, 2014, at 3:51 PM, northwoodsgirl wrote:

    Why oh why couldn't they have taken that approach with the Jeep brand? I hate the new Cherokee and the idea of the mini Jeep (aka Renegade clown car) makes me throw up in my mouth. I don't even want to see the mutant they propose for their 2015 Grand Wagoneer.

  • Report this Comment On May 21, 2014, at 11:01 PM, DomVendetta wrote:

    A9930thTA

    Are you serious? GM has 17 MILLION recalls just this year alone and a bunch of it is from their truck lines.

    There is absolutely no comparison between the new Dodge trucks and the absolute unreliable garbage GM is making.

    Are you living in the 70's? Have you even seen the sales figures for over 8 consecutive quarters?

    Keep sipping the Bowtie kool aid and warching Cheech and Chong while Dodge keeps outselling Chevy and their recalls.

  • Report this Comment On May 22, 2014, at 12:08 AM, LouisTewl wrote:

    @ Northwoods Girl, before you totally gag yourself with a spoon, check the new Jeep Rubicon Trail-Rated Renegade Trailhawk specs out here:

    http://truckyeah.jalopnik.com/why-everyones-going-nuts-over-...

    And for more spec-data only (without the pictures and ad-copy, look here:

    http://www.allpar.com/SUVs/jeep/specifications/renegade.html

    Now the next, and, IMO, real question, which hopefully will be answered before the end of summer, is, "How does it actually check out on the Rubicon trail test drive as conducted by knowledgeable and experienced drivers?" Hopefully FCA investors won't be "throwing up in their mouths" when that key real-world-confirmation question gets answered.

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