Strike may relegate Silverado to No. 3-selling pickup in U.S.

The United Auto Workers’ national strike against General Motors Co. makes it likely that the Ram pickup will outpace the Chevrolet Silverado in annual U.S. sales for the first time ever.

"The loss of the production heading into a month-plus strike now, it makes it hard to believe that the Silverado isn't going to finish behind Ram," said Karl Brauer, publisher at Cox Automotive.

The popularity of pickups has boomed in recent years, supporting growing profit-margins for the Detroit Three automakers — and hefty profit-sharing checks for their UAW employees. Although Ford Motor Co.’s F-series remains king, sales of the Fiat Chrysler Automobiles NV’s Ram surpassed the Silverado's for the first nine months of the year.

Through September, Chevrolet sold 412,259 Silverados in 2019 to Ram’s 461,115 pickups — a difference of about 50,000. Ford sold 662,574 of its F-series. GM’s top-selling vehicle is down nearly 3% year-over-year, while Fiat Chrysler’s is up 23% as it sells the redesigned truck alongside its older model.

"It's a darn good truck," Rebecca Lindland, founder of rebeccadrives.com, an auto industry and reviews website, said of the new Ram. "With or without this strike, they did an incredible job on that truck. It's a good lesson for (GM) in terms of understanding that they can't keep cheating out on interiors. You can't have the accountants have the last word on what materials are used. Consumers are savvy to that."

The 2019 Silverado and 2019 Ram 1500 both debuted at the 2018 Detroit auto show, but they hit dealer lots about eight months apart. While the 2019 Ram 1500 went on sale in the second quarter of 2018, Chevrolet followed a "cadenced-launch strategy," GM spokesman Tom Henderson said.

Production of the 2019 Silverado didn't start until August 2018. And regular and full-size production of the 2019 Silverado didn't hit full-swing until March of this year. The Silverado's heavy-duty models launched in the third quarter of this year with only crew cab and single rear-wheel models.

"That said, reaction from customers and dealers has been strong for both models," Henderson said. Since January, he said, retail market share for Silverado light-duty and heavy-duty combined has increased 5 percentage points. In the third quarter, total sales of Silverado light-duty trucks increased 18%, while total sales of Silverado heavy-duty models were up 7%.

Still, trade-ins for the Ram from the Silverado are up to 8.7% from 6.8% last year, according to auto information website Edmunds.com. Trade-ins from the F-Series are up, as well, to 9.2% from 7.7%. Ram trade-ins for other pickups are down.

"Truck buyers are the most loyal," Brauer said. "Pulling share from one full-size to another is extremely difficult."

It appears that Ram owners are the most loyal: Ram owners bought another Ram 57% of the time, while loyalty rates were 48% for the Silverado and 52% for the F-series, according to Edmunds.

'Three-truck strategy'

Fiat Chrysler is taking a "three-truck strategy," said Mike Koval Jr., director of U.S. Ram brand product marketing. That combines the 2019 redesigned Ram 1500, continued sale of the older model and the new heavy-duty Ram pickup.

"I'm trying to beat everybody," Koval said in a recent interview with The Detroit News. "We designed this truck to be a no-compromise, to be the best truck anywhere in the industry."

The goal, he said, was to "set a new bar in terms of luxury and technology" with a 12-inch touchscreen, an "eTorque" mild-hybrid system and automated safety features such as brake-assist. The Ram 1500 crew cab became the first large pickup to earn the "Top Safety Pick+" designation from the Insurance Institute for Highway Safety.

The 2019 redesign followed a path from efforts that began in 1994, Cox's Brauer said, when Dodge Ram introduced the masculine "big rig" styling.

"It's been a slow build for Ram like the 'Tortoise and the Hare,'" he said. "They just have continued to improve the Ram through everything from styling, innovation and stated specs and capabilities."

Selling the new truck alongside the older model is a strategy that Ram may continue. Fiat Chrysler CEO Mike Manley said during the second-quarter earnings call that the company could update the older-model pickup for value-leaning shoppers. Ram introduced a limited Warlock edition for the classic version this year.

'Hard pill'

The Silverado's fall to No. 3 may not be a problem for GM, Lindland said: "Nobody cares about No. 2. Nobody knows who won the silver in any given event."

Profitability is more important than market share, Edmunds analyst Jessica Caldwell said. In addition to the Silverado, GM has the popular GMC Sierra and mid-size GMC Canyon and Chevrolet Colorado pickups that combined outsell Ram.

“All of the companies have to focus on the bottom-line, bragging rights aside,” Caldwell said. Still, she said, "It's a hard pill for Chevy to swallow."

But right now, GM has more serious issues with the strike, now heading into its fifth week, Lindland said. GM's profitability already is suffering, Brauer noted.

So far, the strike hasn’t appeared to affect sales, with the Silverado up almost 17% in the third quarter of 2019 year-over-year.

But buyers are eating into GM’s stock, according to Cox Automotive: The days’ supply of the Silverado at the end of September was at 90 days, down three days from August. The supply, however, remained above the 64-day industry average for trucks and SUVs. Days' supply for Ram is 85 days.

Restarting production will be key to keeping dealerships well-stocked and and offering the exact models and paint colors that buyers want. The longer the strike goes, the more difficult that will be.

While dealerships said stocks are fine for now, they said they expect to run low by the time GM is able to replenish their lots.

“We had plenty of inventory to start,” said Charlie Gilchrist, chairman of the National Automobile Dealers Association. who owns two GM dealerships in Texas where “our mix is all trucks."

“We’ll probably be in trouble if they end the strike in two weeks to get that production to ramp up to replenish our inventories.”

'Get aggressive'

Falling behind Ram could encourage Chevrolet to introduce some more incentives, analysts said. The brand's website currently is advertising "truck month" deals with up to $10,155 below retail pricing.

The average transaction for the Ram 1500 for the first nine months of the year was $45,004 compared to the Silverado's $43,127, according to Kelley Blue Book. Since the Silverado has fallen behind, Chevrolet has offered more incentives in the third quarter of the year. Across 2018, 2019 and 2020 models, customer cash-incentives averaged $1,744 per vehicle compared to Ram's $1,685, according to Cox Automotive. That's not far off the $1,845 for the F-series.

But Mark Montante, general manager of the Taylor Chevrolet dealership, believes incentive programs have not been as robust as in the past. He added that insufficient truck availability has hurt the Silverado.

“I think it’s temporary,” Montante said. “In the conversations I have had with the area managers at GM … they are going to get aggressive. They want market share.”

bnoble@detroitnews.com

Twitter: @BreanaCNoble