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

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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. 

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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.

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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.

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