How Chrysler's Ram Crushed the Chevy Silveradohttp://www.fool.com/investing/general/2014/04/05/how-chryslers-ram-crushed-the-chevy-silverado.aspx John Rosevear
April 5, 2014
Think you had a hard week?
Think about how it would feel to be General Motors (NYSE: GM).
I'm not even talking about the beating CEO Mary Barra took when she testified before Congress about GM's unfolding recall debacle.
That was plenty bad, of course. But behind all those recall headlines was this grim news: The Chevy Silverado pickup -- arguably GM's single most important product -- came in third in total sales last month.
That was a surprise. And it can't be making GM's leaders very happy.
Yes, the Ram really outsold the Silverado in March
But it's not every day Fiat Chrysler's (NASDAQOTH: FIATY) Ram pickups outsell the Silverado.
In fact, it hadn't happened in almost 15 years -- until it did, last month.
Chrysler reportedon Tuesday that it sold 42,532 examples of the Ram 1500 and its heavy-duty siblings in the U.S. in March, beating the 42,247 Silverados and heavy-duty Chevy pickups sold by GM.
Sure, if you add in the 16,863 full-sized pickups sold by sister brand GMC in March, GM still holds a solid second place in America's pickup sales wars.
But like I said, it has been a long time since the Ram out-sold the Silverado. How did Chrysler pull off that victory?
By going where GM has recently been trying very hard not to go: To the land of deep discounts.
Big discounts led to big sales for Chrysler
Now, many of the individuals who buy pickups for their own use have strong brand loyalty. It takes more than a fat discount to get loyal Chevy (or Ford, or Ram) drivers to switch brands.
But commercial fleet buyers are much more price-sensitive. A lot of pickups are getting sold to general contractors and oilfield-services companies and the like right now. For those buyers, who might be buying three or four pickups at a time, a fat discount can make all the difference.
GM's pickup incentives used to be among the highest in the business. But the all-new 2014 Silverado and Sierra were supposed to change that. They're much better trucks, GM reasoned, so we're going to ask higher prices for them.
That has worked out pretty well for GM -- at the upper end of the pickup market. GM is selling a lot more loaded trucks than it used to, and it's getting much better average transaction prices for them. Long story short, it's making much more money per truck than it did on the old Silverados.
But that strategy has cost it sales at the lower end of the market -- and Chrysler has stepped up to take advantage.
GM is already striking back, but how much will it help?