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Ram v. Silverado: More than rebates

by Bill Cawthon on

Ram-v-Silverado-Web
After learning the Ram had outsold the Chevrolet Silverado, GM spokesman Jim Cain told Automotive News, “The 1980s called. They want their marketing strategy back. It’s really easy to deeply discount your truck, mine the subprime market and offer cheap deals to buy market share.”

Cain had earlier told Bloomberg News, “We would deeply disappoint so many people from Wall Street to our dealers on Main Street if we were to match the kind of things that Dodge is doing,” Cain said. “We’ve made commitments to be disciplined and that’s not anything we’re interested in walking away from.”

However, not long after Mr. Cain spoke to AN, GM announced it was extending its Truck Month program an additional 30 days and adding more cash to the deals. Whereas GM’s best deal on certain 2014 Silverados in March was $7,541, it’s gone up to $8,162 for April, a $621 increase. GM says the spiffs are to sell more Crew Cab trucks.

Apparently, someone at General Motors decided it was time to rethink those commitments to Wall Street.

The financial press has been praising General Motors for its financial discipline, for holding the line on incentives and maintaining profit margins. But according to estimates from TrueCar.com, it looks like GM is still bankrolling the highest average incentives of any major automaker and, compared to Chrysler Group, it has seen slower growth in its average transaction price.

Of course, average incentives across an entire line don’t tell the whole story: according to J.D. Power and Associates, Ram incentives in March averaged $5,598 compared to just over $3,000 for the Silverado. But the chart below shows the latest Ram and GM information and it appears, at least in the offers they mention, that GM is paying out substantially more.

Ram v. Silverado: Pricing and Incentives as of 4/6/2014
Basic Truck – No Options MSRP Destination Sticker Incentives Net Price
Ram 1500 Tradesman basic $24,385 $1,195 $25,580 $2,000 $23,580
Silverado 1500 1WT Basic $25,575 $1,095 $26,670 $2,623 $24,047
Ram Difference -$1,090 -$623 -$467
Premium Truck – No Options MSRP Destination Sticker Incentives Net Price
Ram 1500 Crew Cab Laramie Limited $48,455 $1,195 $49,650 $2,500 $47,150
Silverado 1500 Crew Cab High Country $45,905 $1,095 $47,000 $4,313 $42,687
Ram Difference +$2,650 -$1,813 +$4,463
Source: Manufacturer websites

Not surprisingly, GM itself says it’s meeting internal goals for more expensive pickups while it’s having trouble in the bread-and-butter ranges.

Manufacturers and dealers have other sources of cash to close deals but GM may well be hiding behind the excuse that it doesn’t want to get down and dirty in the pickup wars to hide a more fundamental problem.

At the end of March, Silverado sales were down 7.6% for the first quarter while Ram sales grew 24.9%. For the month, Silverado sales rose 6.8%; Ram sales jumped 25.7%. March was the first month this year that the Silverado beat its year-ago numbers: sales fell 18.4% in January and 12.1% in February. In the same two months, Ram sales increased 22.5 and 25.8%, respectively. The growth story is the same over the past year.

Ram-v-Silverado-Chart-Web

Aggravating the sales issue is the fact the Silverado and, to a lesser extent, the Silverado’s upscale clone, the GMC Sierra, aren’t producing the results GM had to be expecting from a major refresh and Motor Trend’s “Truck of the Year” award.

The difference is just as marked over a longer time period. Since the depths of 2009, when both Chrysler and GM went though bankruptcy, Ram sales have more than doubled, up 200.6%, while Silverado sales grew just 151.7%, the smallest gain of all four pickups from the Detroit automakers.

Ram-vs-Silverado-15Y-Web

Comparisons to the Ram aren’t the only ones where GM struggles. While the Ford F-series has been the undisputed king of the pickups since 1978, GM has been able to take comfort from the fact it builds two full-size pickups and the combined sales of the Silverado and Sierra would frequently beat the F-series’ numbers. But every year since 2010, the Ford has beaten that total. In March, Ford sold 16% more pickups than General Motors.

As the post-recession growth in light vehicle sales slows, the market is getting more competitive. According to TrueCar.com estimates, even Honda and Toyota are getting serious about incentives. GM is going to have to play the game just like everyone else.

But there’s more to it than cash on the hood. Even some Chevrolet dealers are admitting they’re losing sales to the Ram for a different reason: the new Silverado is a very good truck; the Ram’s a better truck.

While GM’s heavily promoted billion-dollar refresh added a good six-cylinder engine and subtracted 250 pounds from the total weight, Chrysler has showered the Ram with features like a reasonably-priced diesel option and innovative suspensions. Chrysler also took care to improve the Ram’s interior: in the high-end models, the Ram (and the F-series) offer much nicer accommodations.

The truck market is one of the toughest. Brand loyalty among pickup owners is higher than in any other market segment but sales results show the Ram is steadily chipping away at the Silverado’s base and it will take more than rebates to slow it down.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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