Fiat Chrysler's (NYSE:FCAU) Ram pickups have been on a tear in the U.S. ever since the company began selling an all-new version of the popular truck for the 2019 model year. Fiat Chrysler has continued to build the older generation of trucks for price-sensitive buyers while simultaneously cashing in on strong demand for the 2019 model, which was named Truck of the Year by Motor Trend.
That momentum continued throughout the second quarter but particularly in June. By contrast, General Motors (NYSE:GM) reported another decline in pickup sales last quarter. This allowed Ram to outsell the Chevy Silverado for a second-consecutive quarter. As a result, some pundits are beginning to wonder whether Fiat Chrysler will permanently overtake GM for second place in the U.S. truck market behind industry leader Ford Motor (NYSE:F).
Ram sales surge, while the Silverado slumps again
The Chevy Silverado has traditionally been the clear No. 2 pickup truck in the U.S., lagging only the fast-selling Ford F-Series lineup. However, Ram has been trying to catch it. In the first quarter of this year, Ram finally overtook its rival, posting sales of 120,026 units (up 15% year over year), while Silverado sales plunged 16%, to 114,313 units.
Ram posted an even more incredible performance in the second quarter. The brand sold 179,454 trucks last quarter -- an average of nearly 60,000 per month -- up 38% year over year. Ram capped off this excellent quarter by boosting truck deliveries 56%, to 68,098 units in June.
Meanwhile, Chevy Silverado sales fell 8%, to 142,464 units last quarter. The pace of decline wasn't quite as bad as in the first quarter, but that's still a substantial drop.
Of course, the Silverado isn't the only pickup that GM sells. Including its twin, the GMC Sierra, the General sold 199,321 full-size pickups in the second quarter, down 7% year over year but still comfortably ahead of Ram. Adding midsize trucks to the mix -- GM has an established presence there with its Chevy Colorado and GMC Canyon, whereas Fiat Chrysler is just trying to break into the market with the Jeep Gladiator -- General Motors sold 242,899 trucks last quarter, compared to 186,706 for Fiat Chrysler.
Including all pickup models, Ford led the U.S. truck industry in Q2, with 254,667 deliveries. GM easily took second place, with a 30% advantage over Fiat Chrysler. But between Ram's strong growth, falling GM pickup sales, and the introduction of the Jeep Gladiator, Fiat Chrysler is closing the gap between itself and General Motors at a rapid pace.
It's not that simple -- at least according to GM
While the numbers are indisputable, GM's management isn't worried about the recent market-share losses. A company spokesperson noted that Ram has offered huge discounts to lure in buyers, while General Motors wants to limit promotions as much as possible to boost profitability.
Additionally, GM claims that it leads both Ford and Ram in the U.S. in terms of retail light-duty truck registrations in 2019. This suggests there's continuing strong demand for its products.
General Motors has hinted that this strong demand isn't showing through in the overall sales numbers due to supply constraints. GM began the transition of its light-duty truck portfolio with crew-cab versions that generate the most profit. Full production of regular-cab and double-cab 2019 models didn't begin until March, and inventory of those affordable models is only now approaching normal levels. Furthermore, the heavy-duty truck model transition is just beginning.
GM noted that it has increased production capacity by 20,000 units annually for light-duty trucks and 40,000 units annually for heavy-duty trucks. That will allow it to reclaim market share starting in the second half of 2019 -- at least if there's sufficient demand.
Wait and see
Ram's surge up the sales charts is quite impressive, even if the brand is using generous discounts to juice sales. As long as Ram continues to offer older-model trucks to attract price-sensitive customers, the brand should be able to deliver sales numbers in the same ballpark as Ford and GM.
That said, Ram may find it hard to repeat the market-share gains it achieved in the first half of the year in the future. If GM is right about sales being constrained by inventory, its launch of regular-cab and double-cab production earlier this year and its capacity investments should enable the company to return to growth in the truck market in the second half of 2019.
Indeed, given the loyalty of truck buyers, GM has a good chance to hang on to its position as the No. 2 truck brand permanently -- even excluding midsize trucks. Industry sales trends over the next 12 to 18 months will provide a better reading on the new balance of power in this lucrative market segment.