Pickup truck prices slashed to boost sales

Fueled by the industry's highest incentives, Ram outsold the Chevrolet Silverado last month by more than 2,400 trucks, making it the second most popular pickup brand in the U.S. for the first time in at least five years.

The escalation in pickup incentives comes as overall U.S. industry sales have started to flatten or fall slightly and concerns rise about higher incentives that could harm industry profits.

In September, Fiat Chrysler's Automobiles boosted the average incentives for its Ram pickups by more than $1,000, or 29%, to $7,082 per unit, according to J.D. Power data.

General Motors responded by raising incentives on its Silverado 21% to $5,647, according to J.D. Power. Ford, meanwhile, held steady as it reduced incentives on itsFord F-Series pickups less than 1% to $5,173.

Ram's generous incentives helped the brand boost its U.S. sales 29% in September compared with the same month last year, giving it a 25% share of the full-size pickup market, according to Kelley Blue Book. Ford, the longtime market leader, had 35.5% share in September.

Tim Watts, president and CEO of Victorville Motors in California, said the incentives helped to boost sales in September.

"Ram is doing fantastic right now," said Watts, who has sold 300 to 400 Ram pickups this year, including some customers who are switching to Ram from other brands.

"It would be a little bit more from GM than from anyone else," Watts said.

While the Detroit Three typically earn profit margins of $10,000 or more on pickups, they also depend on those big profits to subsidize smaller profits from other vehicles. A price war  among the automakers heading into the final quarter of the year, when pickup sales often hit their peak, could have an impact on year-end profits.

Fiat Chrysler declined to say how long it planned to continue its lucrative incentives, but it's clearly a good time for interested consumers to buy a Ram. On its website, the brand is advertising "20% off....for an average of $11,874 in savings on select 2016 Ram 1500 Limited models in dealer stock."

However, incentives for Ram's 2017 models are much lower, an indication that the 2016 incentive may be intended to clear out inventories and make way for the new model year.

Ram's supply of pickups dropped from 103 days in August to 82 in September, according to WardsAuto. That's an estimate of how many days a vehicle sits on a dealer lot before it is sold. Chevrolet's day's supply rose sharply from 71 in August to 91 in September, according to WardsAuto.

“Our September pickup truck sales are a good illustration of how the Ram Truck brand is drawing customers with great product,” Jim Morrison, head of the Ram Truck brand said in a statement.

Chevrolet spokesman Jim Cain said GM doesn't need to raise its incentives to shed inventory of its 2016 models.

Cain also points out that GM easily outsells Ram when sales of its full-size GMC Sierra pickups are included and noted that sales of the midsize Chevrolet Coloradoand GMC Canyon continue to rise.

"I don’t expect a pickup incentive war at all. I think individual companies with case specific issues are going to do what they feel they need to do," Cain said. "But that's not going to upset the discipline that we manage our business with."


To find out more about Facebook commenting please read the
Conversation Guidelines and FAQs

Leave a Comment