THIS RAM CAN GO HEAD TO HEAD WITH ANYONE
Last January, when Dodge's all-new Ram pickup was lowered from a convention center ceiling to its world debut at Detroit's annual auto show, the most anxious observers were from archrival Ford Motor Co. The Ram, with its roomy cab, radical styling, driver air bag, and optional V-10 engine, was clearly a serious challenger to Ford's F-series truck--for 11 straight years the best-selling vehicle in the U.S. Soon after the Ram hit the floor, Ford engineers furiously began measuring and taking notes on Chrysler's first full makeover of its truck since 1971.
Their verdict: Once Chrysler Corp.'s model reaches showrooms next month, it will spark the biggest brawl in years in the $22 billion full-size pickup market. "We're not going to let anybody come play in our business without a pretty good fight," warns Ross Roberts, Ford Div. general manager. Still, analysts figure that Ford, as well as General Motors Corp.'s Chevrolet and GMC Truck divisions, will lose ground to Chrysler, which now holds just 7% of the market.
SHIFTING GEARS. The reason there's a tussle is that full-size pickups have long been among Detroit's best money-makers, in part because heavy-duty tariffs tend to keep out foreign rivals. Gross profits top $5,000 for fully equipped versions, and per-vehicle profits are growing as more individuals buy trucks with creature comforts for family use. This is part of a broader consumer shift from cars to trucks, which has helped boost large pickup sales 10% so far this year.
Even competitors agree that Chrysler may have a hit. "It's a very nice truck," concedes Ford's Roberts. Chrysler spent $1.2 billion over three years to develop the Ram, using the same team approach that spawned the successful LH midsize sedans in 1992. To make the truck stand out, Chrysler designers gave it a bold grill and prominent front fenders akin to some of today's long-haul rigs. They made the cab four inches longer than competitors' for extra comfort and storage. And to smooth the ride, they adapted the front suspension from Chrysler's popular Jeep Grand Cherokee.
Still, the Ram has its work cut out. Its $11,800 base price merely matches the competition. And an extended-cab version--crucial to boosting sales among family buyers--won't be out until June, 1994. Competitors, meanwhile, are hitting back. Ford engineers scrambled to put an air bag in some 1994 F-series models and spiffed up their truck's interior as well. Chevy's C/K model won't get an air bag until the 1995 model year. But GM's largest unit plans a big fall campaign to educate salespeople about countering the new competitor.
Moreover, Chrysler must dislodge some of America's most loyal vehicle buyers. "If you're a Ford owner, it's damn near impossible to get you into a Chevy, and vice versa," says analyst Maryann Keller of Furman Selz Inc. As a latecomer, Chrysler will have an even tougher time. Buyers who use them for work still purchase more than 60% of full-size pickups, and they're typically more impressed by proven reliability than by swoopy design. Concedes Bernard Robertson, Chrysler's vice-president for truck engineering: "We're going to have to earn every sale we get."
Chrysler's first chore will be to get truck shoppers' attention. Starting in September, the company and its dealers will spend more than $40 million on an advertising blitz. First, the Ram will appear on 650 billboards in major truck-buying areas, such as Texas, California, and the Rocky Mountain states. Then comes a direct-mail pitch to 3.6 million pickup owners, as well as TV ads and magazine and newspaper inserts featuring a color poster of the truck. Add to that a $10 million campaign to educate Dodge salespeople about how the Ram stacks up.
NICE SLICE. Nobody expects Chrysler to overtake Ford and Chevy. Still, in 1994, the leaders will each cede nearly three points of market share, to 38.4% and 36.3%, respectively, predicts Christopher W. Cedergren, a forecaster at AutoPacific Group Inc. in Santa Ana, Calif. GMC, whose models are virtually identical with Chevy's, could lose more than a point. Meanwhile, the Ram's fresh look and beefy engines--besides the standard V-6 there are several V-8s and the V-10-- should boost Chrysler's share to over 14%, says Cedergren. That increase in market share could bring $1.5 billion in new sales and hundreds of millions in added profits.
Over the long haul, the pickup fight will intensify. Ford plans to make over the F-series for the 1996 model year, and GM will follow suit with the C/K two years later. Analysts expect Toyota Motor Corp. to ease into the full-size pickup market by mid-decade with an upgraded, V-8 version of its midsize T100. Clearly, hotter competition heralds tighter margins and shorter product cycles, as it already has in compact pickups. Which means that Chrysler can't wait another 22 years to update the Ram again.David Woodruff in Detroit