Chrysler To Stay Truck-Heavy In Weak Personal-Use Market

We noted earlier that Chrysler’s turnaround is dependent on Ram and other truck-based models to maintain the steady profit increases projected in its five-year plans. CEO Sergio Marchionne confirmed the importance of body-on-frame vehicles to Chrysler’s US lineup in a recent interview with Automotive News [sub]. “I think it will be very stupid for us to assume the same type of European style and sizing which has driven the automobile portfolio of Fiat Group will prevail in the U.S.” Marchionne tells AN’s Luca Ciferri. Marchionne says Chrysler’s US lineup of full-sized pickups, SUVs, large cars and minivans will see their fuel efficiency improve to keep up with pressures on the market, but that the US linup will not suddenly downsize or work away from its traditional strengths. Marchionne even aknowledged that the Ram brand would continue to be a crucial profit center, just as Fiat Professional-branded commercial vehicles drive much of Fiat’s profit in Europe. But as another report in Automotive News [sub] explains, the truck market is continuing to erode underfoot. Chevrolet truck marketing executive John Schwegman explains that

in 2005, buyers who chose pickups “primarily for image” accounted for 200,000 to 250,000 annual sales. That fell to about 100,000 in 2008. This year, he says, only about 50,000 personal-use buyers will drive home full-sized pickups.

Ford analysts add that personal-use truck buyer numbers have fallen industry-wide by nearly 200,000 between 2003 and 2008. About 20 percent of the segment fit this category in 2003, making up an estimated 455,000 buyers. Even more troubling is Ford’s estimate that 43 percent of the truck market remains occasional-use buyers, who buy trucks to haul boats and trailers. Under continued pressure, more Americans could be forced to give up such frivolities, or look to the swollen used truck market to fill their needs.

Not that Chrysler’s truck mavens seem to be worried. While Ford and GM reps cite troubling statistics, and their refocused strategies, Chrysler’s Ram brand CEO Fred Diaz indulges in the gung-ho optimism that was the cause of much eye-rolling during his presentation at Chrysler’s five year plan announcement.

I know what the data say about the full-sized truck market, and I’m convinced the best way to fight the trend is to work extra hard to understand what personal-use customers want — but do it without compromising Ram’s reputation for hard work and capability

Nobody is ready to declare the final death of the personal-use truck market, but it’s clear that future growth will be determined more by needs and less by wants. A turnaround in the housing market would revive pickup sales, and there’s already anecdotal evidence of a recent turnaround in personal-use truck sales because, as last year’s gas price shocks fade from the market’s short-term memory. Ultimately though, Ford and GM believe the market for trucks could climb from 2010’s 1.2m unit estimate to two million units in the next three or four years. But that number won’t happen until construction firms start buying large numbers of trucks again, something analysts say won’t take place until after 2010. Meanwhile, the disappearance of personal-use truck drivers will impact profits as much as it has volume. The highest-profit trucks and SUVs were strictly personal-use machines like Harley Davidson F-150, Ram Lone Star, and other luxury-trimmed trucks. Though this spells reduced US-market profits for all of the Detroit automakers, none seem as vulnerable to the loss of the personal truck market as Chrysler.