Chrysler looks for Ram's strengths to crush market woes

**rickaren** · #1 (**permalink**) 08-24-2008, 09:22 AM

Chrysler looks for Ram's strengths to crush market woes

Ford F-150 delay could help
August 24, 2008

SANTA BARBARA, Calif. -- The weather in Santa Barbara can be fairly predictable: Overcast skies in the morning that burn away by midday, revealing beautiful sunny days.

Chrysler LLC hopes for the same in the once-reliable U.S. pickup market as it launches the redesigned Dodge Ram -- a supremely important vehicle in the Chrysler lineup -- during a turbulent time.

The current truck market is so stormy, in fact, that Ford Motor Co. postponed the launch of its redesigned F-150 by two months, saving Chrysler from having to compete face-to-face with the launch of its vehicle this summer and early fall.

Chrysler executives in Santa Barbara last week to publicize the new Ram, which will begin trickling onto dealer lots late this month, say they believe there's still a long-term market for pickups. "As far as we're concerned, this is the best time to launch our best truck ever. As we see competitors backing off a little bit, it's our opportunity to take some share with this brand-new truck," said Marc Seguin, the Ram launch manager. "I'd rather go to a gunfight with a really big gun, and that's what we have here."

The Dodge Ram, known for its styling and Hemi engine, is the underdog to Ford's F-Series, which has carried the title of best-selling vehicle for decades but has come under new pressure as the industry slumps because of a sour housing market and high gasoline prices.

"They won't be competing with the launch of the F-150 anymore because that's delayed, so I can see how that's beneficial to them," said Rebecca Lindland, an industry analyst with Global Insight. New vehicle launches are ushered in with large media campaigns, so two new, big-name truck launches at the same time could lead to "media overload" and potential "consumer confusion," she said.

But Chrysler's edge is probably only slight and temporary, she added.

"Right now there isn't any advantage to anything because the market is so bad," Lindland said. "I guess you need to take what you can get."

Tom LaSorda, a Chrysler president and vice chairman, seemed delighted with Ford's decision during a recent interview.

"We like the fact that Ford delayed. They could delay for another year as far as we're concerned," LaSorda joked. "That gives us a lot of opening from a brand perspective and marketing perspective to launch this car without being overlapped with Ford marketing."

Ford expects its new truck to hit showrooms around October, said Becky Sanch, a Ford spokeswoman.

"The new truck is great. Our customers are really excited about it," she said.

"Whatever they want to do is independent to why we're making our business decisions," she said about Chrysler. "F-150 has been a leader, and we plan to remain a leader. We think our timing is really going to work well for our business."

Ford sold almost twice as many F-series trucks last year as Chrysler sold Dodge Rams in the United States. But the entire pickup market is hurting. So far this year, total large pickup sales are down 24.6% from last year, according to Autodata. U.S. Ram sales are down 30% in that same period.

But Ram remains Chrysler's top-selling nameplate by far.

In announcing the F-150 launch delay last June, Ford officials said the company was left with more of the old body style of the trucks than it needs and wanted to sell them off before launching a new version.

The extra time may have eased pressure on Ford to slash prices and clear out old models. Incentives last month were worth just under $5,000 per F-150, according to Edmunds.com, while Chrysler's incentives on the Dodge Ram were about 50% higher at $7,458 -- and about $5,000 more than the average for all vehicles.

While incentives have diverged, inventories for the two trucks remain similar. According to J.D. Power and Associates' Power Information Network data, a Dodge Ram sat on a dealer's lot for an average of 109 days before being sold in July -- up from 57 a year ago. Ford's days-to-turn was 111 in July. The total industry retail turn rate in July was 62 days.

LaSorda, who is in charge of Chrysler production, said truck sales in July were ahead of the company's plan. "It's right in line with Jim Press' plan of taking the old truck inventory down," LaSorda said, referring to Chrysler's president in charge of sales. "In fact, he's ahead of plan."

The Ram's new design is more evolutionary than revolutionary, staying true to its distinctive big-rig look.

Designers spent considerable time working on making the vehicle more aerodynamic. They also gave more attention to interior quality. Analysts have said the new Ram's interiors are a remarkable improvement over the previous model.

"I like the new Ram. I think the product is good," said Erich Merkle, an industry analyst with Crowe Chizek and Co., an accounting and consulting firm. "But the problem is it's launching into a firestorm. This is a difficult market. You've got new home construction at lows that we haven't seen in almost 20 years, and you've got gas prices at very close to record highs."

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