Why Ford Could Sue Chrysler Over Pickup Claims

A battle over towing capacity ratings seems silly -- but it could end up in court.

Aug 3, 2014 at 12:06PM

Images

Chrysler says its heavy-duty Ram 3500's towing capacity is "best in class". Ford says otherwise, and the argument is getting heated. Source: Fiat Chrysler.

The battle for pickup sales has always been hard-fought. 

But now Ford (NYSE:F) is threatening to take the battle to court.

What's the issue? Towing claims on heavy-duty pickups. 

Fiat Chrysler (NASDAQOTH:FIATY) says that its Ram heavy-duty pickups have "best-in-class" towing capacity. 

But Ford says that's not so -- and according to an Automotive News report, the Blue Oval is threatening to sue Chrysler if it keeps making the claim.

How big is your trailer, Chrysler?
Here's the background: Earlier in July, Ford released details on its 2015 F-Series Super Duty lineup. Among those details: A claim that Ford's new 2015 F-450 Super Duty pickup can now tow a whopping 31,200 pounds, up 6,500 pounds from the 2014 model. 

There's some fine print in there, of course, namely that this is for a truck equipped with a fifth wheel in its bed, towing a trailer with a "gooseneck" that connects to the fifth wheel. 

Images

A 2015 Ford F-450 Platinum towing a "gooseneck" trailer. Source: Ford Motor Co. 

But it's 1,200 pounds more than what Chrysler can offer. Chrysler's Ram 3500 has a maximum claimed towing capacity of 30,000 pounds.

Chrysler says that the F-450 and the Ram 3500 are in different classes, and so its claim of "best in class" for the big Ram is valid. The U.S. Department of Transportation divides trucks into eight different classes, from compact pickups up to tractor-trailers. 

Chrysler's argument is that the F-450 is a Class 4 truck under the DOT rules, and its Ram 3500 is in Class 3. But per Automotive News, Ford insists that the F-450's "gross vehicle weight rating" -- the weight of the truck plus its maximum load -- is just low enough to keep it in Class 3. And Ford is threatening to take Chrysler to court to make its point, according to the report.

(What about the third big pickup player, General Motors (NYSE:GM)? GM says its Chevy Silverado 3500 is rated to tow 23,200 pounds with a fifth wheel and gooseneck, well below the claims made by Ford and Chrysler. GM seems content to stay out of this fight.) 

It sounds like a silly dispute, doesn't it? It's not. Here's why.

So, why is this important?
Here's why it's a big deal: Heavy-duty pickups are super profitable products. 

They don't cost a whole lot more to build than a regular pickup, but they're priced significantly higher -- often over $50,000. And many buyers order their trucks loaded with luxury features, which adds even more to the per-truck profit for the automakers.

Images

These aren't austere work trucks: Chrysler's 2014 Ram 3500 Laramie Longhorn comes with leather seats and woodgrain trim, among other amenities. Pricing starts at just over $50,000. Source: Fiat Chrysler.

Heavy-duty pickups don't sell as well as full-sized light-duty pickups like Ford's F-150 and the Ram 1500, but they're a significant portion of the market. According to TrueCar.com, heavy-duty pickups made up 23% of total full-size pickup sales in the U.S. in the first half of 2014.

Those buyers tend to be people with big towing needs: A large boat, a horse trailer, heavy equipment of some kind. Towing capacity matters a lot in this corner of the market. 

Enough, apparently, that Ford is willing to call in its lawyers -- and Chrysler isn't willing to back down.

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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers