By on October 31, 2017

2017 Ram 1500 Sublime Sport

Unless you’ve been living under a rock, you know Ram will drop a new half-ton pickup at the North American International Auto Show in Detroit in January. It’s a big gamble redesigning a cash cow, lest the truck faithful turn up their noses at the new styling.

In the past, manufacturers have hedged their bets by simultaneously producing both the new and old styles, such as when Ford offered both the F-150 and F-150 Heritage in 2004. Now, Ram appears poised to deploy the same strategy in 2018, according to bossman Sergio Marchionne.

During last week’s FCA third-quarter earnings call, Marchionne disclosed that the company will continue making the current Ram through the calendar year 2018. Ram will have the manufacturing capacity to do so thanks to a retooled Sterling Heights Assembly Plant.

Sterling Heights will churn out the new Ram 1500 while the current bodystyle soldiers on at nearby Warren Truck Assembly Plant. More trucks on the ground is rarely a bad thing, as dealers understandably enjoy selling the high-margin machines. Plus, the extra capacity could give Ram a chance to knock Chevrolet’s Silverado down to third place on the sales charts.

Year-to-date, the entire light truck market is up 5.2 percent, with the Ram selling 374,901 pickups and the Silverado line finding 418,590 homes. Even with a new Ram on the horizon, that sales number represents a 3.8 percent increase over the same timeframe last year.

“My expectation is that we’ll run the old installation — and at least for the whole of 2018,” Marchionne said during last week’s earnings call. “Production capacity is confirmed, so it’s up to us to decide how long we run it.”

This author remembers it working at a Ford store in 2004, when we had the option of selling customers either the new F-150 or the F-150 Heritage Edition. Shoppers who wanted the latest and greatest were eagerly plugged into the new-style pickup, while those looking for value were shown the older model. Truth be told, it worked really well. July 2004 was the best month in our store’s history.

In most cases, manufacturers are able to offer the older version at a cut-rate price because development and tooling costs have been recouped ages ago. In Ram’s case, this will likely result in FCA initially cranking out top-dollar trims of the new truck to pad their bottom line and maximize transaction prices. The old style will be able to capture the lower-priced end of the market by offering heavier incentives without damaging the market value of the new truck. It’s a shrewd strategy, if the manufacturing capacity exists (and for Ram, it does).

If I occupied the manager’s chair at a Ram dealer, I’d be making damn sure my sales staff were strongly suggesting to customers considering a Colorado or Canyon that they can get a much bigger truck for similar money if they buy an old-style Ram. This is in addition to capturing a few brand loyal customers who are not cottoning to the new bodywork.

[Image: Fiat Chrysler Automobiles]

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43 Comments on “In With the Old: FCA Plans to Ram Its Way Through 2018...”


  • avatar
    srh

    Try though I might, I still cannot get used to hearing “Ram” as a brand rather than a model.

  • avatar
    PrincipalDan

    2004 Heritage was great – says the totally biased guy for having owned one.

    V8 automatic, manual windows, bench seat, rubber floor, and up level stereo CD/cassette. Perfect truck.

  • avatar
    I_like_stuff

    Over / under on how many comments before we get the snarky comment about how nobody who buys a truck actually needs one and it’s all about compensating for something?

    I say 4

    • 0 avatar
      Jack Denver

      Lots of people don’t NEED trucks but they need to drive something so it might as well be a truck. But why does it have to be so f-ing BIG when 99% of the time it’s just hauling 1 person and zero cargo? Classic American pickup trucks were the size of “compact” pickup trucks today.

      • 0 avatar
        srh

        Why does it need to be so f-ing BIG?

        I’m in the market for a truck. I have a few requirements: creature comforts and the like. Optioned out as I’d like it, the F-150 costs about $60K, and the F-250 costs about $54K.

        Sure, I could get a mini-truck, but then I get a bed that can’t hold my bicycle, and certainly can’t hold my ATV. So it’s no longer useful as a “truck”. It’s more like a lifted Subaru Baja. Not to mention, those mini-trucks cost /more/ than a full-size truck and frequently get /worse mileage/.

        So for whatever reason, for someone who lives in suburbia (or, as I do, on acreage in a rural area), a Superduty ends up making more economic sense than a smaller truck.

        • 0 avatar
          JohnTaurus

          “Sure, I could get a mini-truck…”

          So, I assume you live in Mexico and are referring to the Chevy Tornado?

        • 0 avatar
          phreshone

          See Section 179 “Hummer Loophole” which provides a major incentive to purchase 6000lb+ GVWR trucks to those who can use the tax deduction…

          • 0 avatar
            Kyree S. Williams

            True, although you don’t necessarily need to buy a truck for that. Many larger crossovers / SUVs qualify, including pretty much everything mid-sized that’s RWD-based, and just about anything that’s BOF.

            For example, the current Acadia (which is on the smaller side of the three-row crossovers) qualifies, even the base model with the I4.

      • 0 avatar
        JohnTaurus

        “Classic American pickup trucks were the size of “compact” pickup trucks today.”

        Wrong and wrong. First, there are no compact trucks on our market, the smallest are midsize. And no, they aren’t as big as old full-size trucks. That’s 100% b.s..

        Why don’t you try comparing the actual dimensions of new trucks vs. those from 20 years ago? I’ve done the comparison on here several times. Guess what? There are very little gains in size from old to new. A gain of just a few inches on certain models, most were within spitting distance of the old models. The main difference being that we have half ton crew cabs now, but since they come with short beds, they still aren’t that much bigger.

        But, please, tell us all about how new trucks are SO BIG and old trucks weren’t. Its absolutely not true, but if it makes you feel better, keep repeating the same crap.

        • 0 avatar
          Jack Denver

          I’m not talking about 20 years ago. That’s not “classic”. Compare a ’49 Chevy Advanced Design 1/2 ton pickup (that’s the truck I drove on the farm growing up in the ’60s) with a Chevy Colorado (without the stretched cab) and even the Colorado is a little bigger. And that was an actual working truck that hauled chicken manure and not bicycles.

        • 0 avatar
          ptschett

          I’d say the 20 years can be at least doubled. When I was in high school that long ago I spent my summers driving my family’s farm pickups that ranged from nearly-new to 20 years old at the time, and my 2017 Ram 1500 quad cab/short box doesn’t feel any meaningfully bigger to me than those now 20-40 year old, generally regular-cab / 8′-box pickups were.

      • 0 avatar
        I_like_stuff

        Jack Denver: I was off by 1. Should have taken under 5. Darn.

        Why do the have to be so big? I don’t know. Why does an Airbus 380 have to be so big when a Cesna will do? Why does anyone need a 70″ TV when a 20″ is available? Why should anyone live in anything larger than a 500 sq ft apartment? Why do we need Great Danes, when Pugs are perfectly good dogs. Why do we need an Iphone PLUS when an iphone is a perfectly good size?

  • avatar
    Adam Tonge

    What happens when this truck looks better than the new truck?

    • 0 avatar
      cdotson

      The price spread between new and old won’t be as great and they won’t net the increase in sales they’re looking for. This will cause an earlier shutdown of production of the current style truck to force customers to the newer truck which will result either with 2018 sales being down slightly, or if current inventory carries through most of the year maybe a slight increase followed by a precipitous drop in sales in 2019 once inventory is new-only.

      Spy photos and renderings of the new truck look like FCA took “CUV all the things” *WAY* too seriously. Not the trucks, nobody meant the trucks.

      • 0 avatar
        DeadWeight

        “The price spread between new and old won’t be as great..”

        This is going to be an industry-wide trend affecting most automakers, with a few exceptions in terms of automakers and segment, and it’s going to *literally* put many automakers and dealerships under severe stress going forward.

        It’s largely (but not entirely) due to the industry’s massive shift and reliance on leasing on the two and three year lease cycle model (at heavily subsidized, pie-in-sky projected residual valuation pipe dreams) and also cheap credit (as well as extended financing, aka “I only care about monthly payment) sales.

        Those who claim securitizers of ABS bundles will forever be able to work some sort of voodoo to keep new and slightly used (off-lease) vehicle pricing at a historically high near-inversion rate forever are smoking some good brand of crack.

        There is a tsunami of 2 and 3 year vehicles now flooding the lots, and whereas it’s a 3-4 meter wave now, it’ll be 6-8 meters, then 12-15 meters in the coming 2 to 3 years.

        • 0 avatar
          87 Morgan

          Perhaps DW, but the fleet is still really old and we would do well to retire some of the late 90’s early 00’s rigs running around with 200k on the odo and a safety inspection last performed during Obama’s first term.

          I believe that their is plenty of ‘room’ yet to move the off-lease units.

          • 0 avatar
            DeadWeight

            They will move them, but at much lower prices vs today.

            Everything is fake, and there is no true price discovery, through the CTRL + PRT function and global synchronization of the world’s largest central banks, for 9 years now, while credit is widely accessible to even the worst credit risks.

            It’s CBs blowing bubbles, having them burst, then re-flating them again…1997….2003….2007….2009-2017.

            This is the “everything bubble.” There’s going to be a really bad hangover.

        • 0 avatar
          I_like_stuff

          Has nothing to do with a monthly payment for me, it has everything to do with the total cost of ownership (or lease-ship) over the same 3 year span. And leasing is a no-brainer.

          Leasing today has never been cheaper. As was said above the residuals are crazy high and money factors are crazy low. Add in manufacturer incentives, fleet discounts, partner programs.. Plus sales tax is only paid on the lease, vs paying on the full purchase price.

          I’m leasing two 2017 vehicles. One of them appropriately enough is a Ram. Combined the MSRP on the two was $110K. Total lease payments with sales tax and $0 down on both, just under $800. Compare that to buying the two cars for say $100K. Tax alone for me would be $9000. Poof $9K down the drain. And in 3 years, I’d be lucky to get $60K in trade in for both. So total cost of roughly $50K to own for 3 years vs $29K to lease. Let’s say I get really lucky and get $70K in trade in. I’m still down $10K in own vs lease.

          Yet for some reason leasing still have a bad connotation with some people. Well I know the reason. Because few people understand leases and it’s easy to get ripped off by unscrupulous dealers. But if you know how to take advantage of them, it’s never been a better time to lease.

          • 0 avatar
            DeadWeight

            The discussion isn’t centered around leasing (and its pros/cons).

            It’s about the massively larger pool of vehicles now being leased on 2 and 3-year cycles, being turned in off-lease every 2 to 3-years, and how that larger pool of available, relatively new-ish vehicles will affect all vehicles prices.

          • 0 avatar
            28-Cars-Later

            DW, you know the fix is in.

            No relief for the proles.

          • 0 avatar
            bienville

            “Plus sales tax is only paid on the lease, vs paying on the full purchase price”

            Offer not valid in Texas, New York, Minnesota, Ohio, Georgia, and Illinois.

          • 0 avatar
            DenverMike

            Right but you don’t “buy” a vehicle if you plan on dumping it, 3 years in

            To “lease or own” depends entirely on the situation and vehicle. I put on a lot of miles on my trucks plus lots of wear&tear.

            No matter how you try to not bang it up, not back into things, not spill drinks, not wear out the seats, nor generally trash the interior, stuff happens. Big dogs help.

            **If your truck is a garage queen just used for showing off, hauling air and occasionally bags of mulch, ignore this post. But lease all you want.

      • 0 avatar
        DenverMike

        @cdotson – Ford still hasn’t matched the F-series radical sales-record when they overlapped the old and new F-150 in ’04. Fleet buyers loved that they had a 2nd chance to scoop up the outgoing model.

        Most “Heritage” F-150 I spot are complete plain white, stripper regular cabs, long beds. They’ve got the unique for that year, solid amber turn-signals up front.

        • 0 avatar
          cdotson

          DenverMike,

          I know that 2004 was the F150’s banner year largely due to the availability of both truck styles. Their “old” truck had done incredibly well despite my personal disdain for its styling, interior, ride, and driveability. The “new” truck was better on every front and Ford was aggressively pursuing a 7-figure sales year (that they still failed to achieve IIRC).

          I was specifically answering Adam Tongue’s question about what happens when people don’t like the new Ram better than the current one. It’s a valid question because the leaked images I’ve seen of the new Ram show it to be a hot mess. This is coming from a Mopar guy who owns a 2002 Ram, liked the 94-01 Ram styling better, and would love to get a deal on a current Ram 2500. I honestly believe current Ram pricing will be supported with less discounting during the overlap as a result of the impending switch to a less appealing style. This will not lead to the level of sales success that Ford saw with the same strategy.

          • 0 avatar
            DenverMike

            They smashed the all-time sales record by piling on the rebates, and early on. I got my new gen March ’04 with shocking rebates, usually not available until late Fall.

  • avatar
    Jack Denver

    FCA is already doing this with its minivans. This is not a sign of a healthy company – this is something that Honda or Toyota would ever do. It makes a certain amount of short term sense but ultimately it degrades your brand to be selling obsolete technology at a discount price.

    Also you are going to be stealing sales from your own brand to some extent. Buyer comes in expecting to buy a full priced new model but he buys the cheapo one instead.

    Maybe it would be better to sell the cut rate trucks as Dodge in order to preserve the Ram brand? Maybe bring back Plymouth as a low end brand, like Skoda or Dacia and fill it with a stable of obsolete vehicles sold at cut rate prices for bottom feeders.

    • 0 avatar
      Adam Tonge

      I’m fine with them selling the vans and especially the trucks longer. They are good products that sell. If anything, RAM needs more production capacity. They could sell more trucks, but they can’t build anymore because SHAP isn’t up and running.

      If they do this right, they should increase market share while working out the kinks and the new factory.

      • 0 avatar
        Mandalorian

        Exactly, trucks and vans simply have longer lifecycles and are improved continuously throughout. The outgoing Ford Superduty is a great example, the same basic bodystyle stuck around for nearly 20 years, but the difference between a 1999 and a 2016 is night and day.

    • 0 avatar
      JohnTaurus

      Well, since the Tundra sells so poorly, and is on a decade-long design cycle, I doubt it would do much good. And the Ridgeline’s previous generation was euthanized years before the new one was ready due to the same problem, poor sales. If their products were still selling very strong when the replacement was ready, AND it was a product that appeals to value shoppers as well as those wanting a fully trimmed “look-at-me” mobile, maybe they would do the same. Its hard to apply this metric to cars, unless fleet sales are a factor (which is why we had a Cruze Limited and Impala Limited for a while after the new models were released).

      And yes, changing it to be a Dodge again would do wonders…for confusion and bewilderment. Most still think of Ram as a Dodge, anyway. They don’t exist in a stand-alone dealer network, so if they’re still going to be on the same lot as the new truck, what possible benefit would there be to rebranding it?

      As mentioned in the article, it has worked in the past for Ford (and also GM in the late 90s when the old style continued along side the new for a while), their “brand” didn’t suffer because the old trucks stuck around, quite the opposite. For people just wanting a basic new truck that can do what they need it to do for as little money as possible, why try to force them into buying a highly optioned new model? If they go on the lot and every Ram they see is $45k+ with leather and other needless frills, they’re likely to just walk away instead of paying $10k more so they can flaunt the new, fully loaded bodystyle as they pile construction materials in it and wash it every 15 months.

      • 0 avatar
        DenverMike

        The Heritage carryover helped Ford sell a record-breaking 900K plus F-series that calendar year, including a few thousand Lightnings that wouldn’t have otherwise happened.

        Except the Mexico assembly plant wasn’t retooling for the next generation, it was ceasing F-150 production, so it was a no-brainer, even if no production snafu’s hit the F-150 changeover.

      • 0 avatar
        Carrera

        Hmm…I wouldn’t say “Honda Ridgeline was euthanized years before the new one was ready”. The last Ridgeline in production was a 2015. Honda used 2016 to retool the Alabama plant where the Ridgelines were made since 2009 I think. The new Ridgeline came out in 2017 so they were absent for 1 year. The Ridgeline always sold just enough for Honda. They never had an overproduction or ever offered big cash back incentives on them. Actually, I think the new Ridgeline, while I find it uglier than the first one, still sells in decent numbers for Honda. The problem is the price…but that’s a problem with most trucks.

      • 0 avatar
        silentsod

        Speaking of people not knowing Ram was spun off into it’s own brand – it was years after they had done so before I learned it was no longer a Dodge Ram.

    • 0 avatar
      stuki

      Honda and Toyota in general does not sell any single “model” priced from $15K to $80K OTD.

      Halftons can easily be viewed as multiple separate models, who just happen to share the same platform and first name. Kind of like some Toyotas and Lexuses, or Hondas and Acuras. In which case Toyonda sometimes does phase in a new underlying platform in one of the brands, while the other still uses the old one.

  • avatar
    el scotto

    Did they consult the Chinese about the new design?

  • avatar
    87 Morgan

    I have not seen the new design, but the idea of building both is not necessarily a poor choice.

    FCA will be able to put heavy discounts on the previous gen model to capture truck sales that would go to GM/Ford. As we know big cash on the hood helps 3 groups. 1. The buried in their trade and need the 10k to cover their negative equity. 2. Perpetually bad credit who can only get a bank to finance them at 80% of invoice/wholesale book OTD. 3. The value shopper (aka my father) who only buys Mopar but keeps them for 200k miles regardless.

    Finally this brings buyers into the showroom that otherwise would not, which is a good thing for FCA at this point. They are going to need all the brand loyalists they can find in the not so far off future in my opinion.

  • avatar
    deanst

    FCA already has the cheapest trucks, so not sure how this really helps – will they get to 40% or 50% off MSRP? Nonetheless, I suspect it will be like the minivans – they’ll keep producing the old one until nobody wants it. Looks like 2018 will be a good time for Sergio to sell – the naive buyer will assume he can convert those no profit tucks sales into the ridiculous margin sales GM and Ford enjoy.

    • 0 avatar
      danio3834

      What Ford did with the Al F-150 was put substantial price increases on top models to subsidize the XL and XLT to keep the price competitive for fleets, which is enormously important for Ford.

      The dual Ram strategy will allow the lower end models to continue to exist for low margin sales without necessarily being subsidized by a reliance on top level models or bear a massive cost increase. It’ll give more time to ease price sensitive customers into the newer model.

      As long as the two 1500 models don’t compete directly with each other at first, it should work out OK.

      • 0 avatar
        Adam Tonge

        There is more than enough room in the market for both trucks. I don’t understand the concern from some. FCA needs more capacity so they can sell more trucks. This gives them that while offering two products that won’t overlap that much.

  • avatar
    indi500fan

    I think most of this is so they don’t have to re-tool the plants simultaneously, which makes a lot of sense.

    I hope on the new one they fix the rust problem on the bed (above the rear wheel openings). There are so many nice looking Rams around here with that part rusted out way before anywhere else on the body – and I’m not even in the true Great Lakes salt belt.

  • avatar
    True_Blue

    I want to commend the author for making a great case to consider the newer Ram, with that selected photo.

    Lord above is that an awful looking example. Highlighter green with almost-black wheels… and are those headlights factory? They look like the Amazon specials for $200 and free shipping.

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