Fiat Chrysler Automobiles (FCA) is studying the development of a full-size SUV for Ram. Full-Size SUVs are extremely profitable on a per unit basis, but both the quantity and the endurance of consumer demand will be key factors for product planners to address before FCA can make a final decision.
“The full-size SUV segment is the near-exclusive use of some others and we have a reasonable chance of getting at least part of that market,” FCA CEO Sergio Marchionne said
Marchionne was referring to the near monopoly GM has enjoyed in the segment for years.
GM platform mates Tahoe, Suburban, Yukon, and Yukon XL tallied about 220,000 sales, commanding 76 percent of the market in 2014. The Ford Expedition was a distant second at 44,000 units, while the Nissan Armada and Toyota Sequoia brought up the rear at about 12,000 units each.
And this year looks similar, though both segment and GM sales are down about seven percent through August.
Each of these products shares its platform, to one degree or another, with the full-size half-ton trucks of their respective brands. This reduces the development, production, and after-sales support expenses associated with these SUVs.
Still, Marchionne sees additional savings and efficiency.
“I think we have a unique opportunity with a renewal of the pickup line, with the powertrains we selected, to significantly increase output,” he said.
But it feels like we have been here before. For example, Ford killed the Super Duty-based Excursion in 2005 after annual sales of 20,000 to 29,000 units. And Chrysler orphaned the Durango/Aspen twins in 2008 after combined sales of 46,000 to 82,000 over the preceding three years.
Granted, the circumstances that precipitated the death of these nameplates may not be an exact match for the contemplated Ram – but – while development costs may be driven down through the improved efficiency, there is still a minimum volume required to make a full-Size Ram SUV viable.
What about other products FCA already has in the pipeline? The company has reportedly green-lighted a new Grand Wagoneer to be based on the next generation Grand Cherokee. The new Grand Wagoneer, scheduled for release in 2019, is said to be an up-scale vehicle aimed at Range Rover, rather than Tahoe.
Toyota has followed a similar strategy with the unrelated but similarly sized Sequoia, Land Cruiser, and LX570. There may be room in FCA’s line-up for a full-size Ram SUV plus a marginally smaller high-end Grand Wagoneer. However, FCA does not have Toyota’s global scale and thus may struggle to find sufficient demand.
Current consumer infatuation with SUVs does not extend to the full-size segment. In the face of a record sales year for the auto industry, Tahoe, Suburban, Yukon, and Expedition sales will all be down versus last year. What’s more, these SUVs are all selling at 50 percent or lower volumes versus their 2000-2007 peak. Add to this, historically low borrowing costs, inexpensive fuel, numerous pre-existing full-size competitors, and the explosive popularity of three-row, mid-size SUVs and Crossovers and the full-size segment does not appear to be poised for expansion.
If Ram is going to have a full-size SUV, the brand will need to make it profitable with sales of 20,000 per year or less. It’s up to FCA to determine if the demand, expense, and risk justify the investment. From a consumer perspective, we hope FCA moves the project forward and we would be excited to see a diesel once again available in a full-size SUV.
We look forward to some clarification of FCA’s product plans in early 2016 when the company updates its Five Year Plan. In the meantime, what do you think about a Ram SUV?
from Automoblog.net http://www.automoblog.net/2015/10/29/full-size-ram-suv/
from Tumblr http://peternpalmer.tumblr.com/post/132180448806