Chrysler Has a Lot Riding on Redesigned Pickup Truck


Chrysler Group, beset by red ink and low morale, today takes the wraps off a completely redesigned Dodge Ram pickup truck that it hopes will be a key to its recovery.

Only a couple of years ago, the U.S. unit of DaimlerChrysler was the most profitable per-vehicle auto maker in the country, if not the world. But now Chrysler is sorely in need of hit products to boost earnings and market share, not to mention its image and morale after numerous management shake-ups and massive job cuts since its acquisition by Daimler-Benz in 1998.

Chrysler executives think they’ve got a hit in the new Ram pickup being unveiled at the Chicago Auto Show.


“It’s obviously very important to Chrysler,” said Frank Klegon, Chrysler’s vice president for truck platform engineering. “We’re currently dedicating four assembly plants to it, so it’s a significant vehicle for Chrysler.”

It’s high time that Chrysler redesigned the Ram, said David Healy, auto industry analyst for Burnham Securities. “It hasn’t been restyled in so long that it’s a drag on their performance. It used to be a leading-edge pickup, but it’s probably worst-in-class now.”

The full-size pickup truck is a crucial sector of the U.S. auto industry. Producing fat profits, it has long been a monopoly of the American Big Three auto makers. Ford Motor Co.’s F-series pickup has been the country’s best-selling vehicle--car or truck--for years, and Chevy’s Silverado pickup is No. 2.

But Ram sales last year were down 11.2% from 1999 as the truck became long in the tooth in the wake of new models from Ford and General Motors Corp.

“For us to capture market share, we need a new product,” Klegon said. “As the competitive and regulatory environments change, it makes sense for us to invest.” Chrysler has put $2.4 billion into the new Ram program, he said.

Chrysler also introduced last month the Jeep Liberty, an upscale replacement for the Jeep Cherokee that company executives and Wall Street investors hope will, along with the Ram, help pull the Chrysler Group out of its deep losses.


The current Ram was introduced in 1993, replacing the bland, boxy Ram D Model pickup that was 22 years old.

“We needed a whole new truck, and a whole new idea about what a full-size pickup should be, in order to grow beyond 6% of the market,” Mark Heber of Dodge truck marketing says of the current design. “We added things that truck buyers never knew they needed, like a cool exterior design that would polarize the market.”

Indeed, critics scoffed and said the Ram’s controversial, snarling look would fall flat.

But the rugged look caught on, and Dodge--now one of the brands in DaimlerChrysler’s Chrysler Group along with Chrysler and Jeep--was able to boost its full-size pickup truck sales from 95,000 in 1994, or 6.9% of the market, to more than 380,000 last year, or 17.4% of the big pickup market, amounting to some $7 billion to $8 billion in revenue. The Ram was the seventh-best-selling vehicle in America last year.

Chrysler overall, however, is in an alarming slump. It lost $512 million in the third quarter and an estimated $1.2 billion in last year’s final quarter. Last week it announced it will eliminate nearly 26,000 jobs, close six factories and reduce production at seven more.

Chrysler is widely expected to announce a write-off in excess of $2 billion when DaimlerChrysler holds its annual news conference on Feb. 26 in Stuttgart, Germany.

Chrysler desperately needs products that will make a dent in its losses. The Viper and Prowler sports cars have hefty profit margins but are sold in such small numbers they have little effect on the company’s bottom line. The wildly popular PT Cruiser is a relatively low-margin model, and Chrysler can’t build enough of them to meet demand, so it does not bring in dramatic profit either.


High hopes thus rest on the Ram, whose production launches in July. The truck goes on sale this fall.

The macho, in-your-face front styling with the prominent cross of the Dodge grille remains, and everything is bigger, from three extra inches inside the cabin to leaner but more powerful engines. Fully independent front suspension has been added to ease the ride and noise, but overall the truck is an effort to “keep the testosterone content,” said analyst Healy.

The new Ram also sports more safety and convenience features to appeal to women and families, such as optional side air bags, perforated front rails to absorb more impact in crashes and enough room in the rear seat of four-door trucks to put a standard rear-facing baby seat.

Being such a core, high-profit product, the Ram’s make-over is risky, said Lehman Bros. auto industry analyst Nicholas Lobaccaro. “It depends on how well they design it and how durable the truck is, because they’ve had problems with that in the past,” he said.

Besides Ford and GM, Chrysler also must face Toyota Motor Corp., which has entered the big-pickup fray with its hot-selling, U.S.-built Tundra, frequently named in enthusiast magazines as the best of the full-size pickups. Japanese rival Nissan Motor Corp. is also building a U.S. factory to make its own big pickup.

Klegon said Chrysler expects to sell 259,000 new light-duty Rams in the ’02 model year, made in St. Louis; Warren, Mich.; and Saltillo, Mexico. The plant in Lago Alberto, Mexico, will continue to build the current heavy-duty Ram as a carry-over model before closing down as part of Chrysler’s plant-closing plan and transferring production to Saltillo.


Chrysler won’t say if there will be a full-size sport-utility vehicle built on the new Ram’s frame, a key product Chrysler lacks but which is made by all three of the competitor pickup trucks, including Toyota. Klegon said, however, “We think this platform has a lot of other opportunities.”



The new Dodge truck retains the brawny big-rig look. Highway 1


Rough Terrain for Dodge Ram

Market share for the Dodge Ram pickup truck grew quickly after the current model was introduced in 1993, but volume last year was still less than half of industry leader Ford’s and has dropped below levels of 1999 and 1998. Meanwhile, Toyota is edging up quickly with its highly praised Tundra in a market sector that was once a monopoly of the Big Three.


Market share of full-size pickup trucks sales in the U.S. market


Ford F-Series: 42%

Chevrolet CK/Silverado: 38%

Dodge Ram: 7%

GMC Sierra: 13%



Ford F-Series: 40%

Chevrolet CK/Silverado: 29%

Dodge Ram: 17%

GMC Sierra: 9%

Toyota Tundra: 5%

Source: Autodata Corp.