Ram Pickups Outsold the Chevy Silverado Last Quarter. So What?

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New Fiat Chrysler (NYSE: FCAU) boss Mike Manley has set a goal of getting the Ram truck brand into second place in the pickup wars. Ram made progress on that front in 2018, posting a 7% increase in its U.S. deliveries, whereas sales of General Motors' (NYSE: GM) competing Chevy Silverado didn't grow last year. Nevertheless, GM ended 2018 with more than 585,000 domestic Silverado deliveries, well ahead of Ram's full-year total of 536,980.

By contrast, Ram did overtake the Chevy Silverado in the domestic market for the first quarter of 2019. Yet while this development captured plenty of headlines, it was not nearly as significant as it may have appeared.

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Ram gains at Chevy's expense

During the first quarter, GM's full-size pickup sales plunged, led by a 16% decline in deliveries of the Chevy Silverado. Meanwhile, Ram pickup sales soared 15% to 120,026 units, compared to just 114,313 for the Silverado.

Fiat Chrysler attributed Ram's stellar performance to the company's strategy of building two different versions of the Ram pickup this year. In addition to the all-new version of the Ram 1500 that was launched last year, the company is still building cheaper Ram Classic pickups based on the previous-generation architecture.

While Fiat Chrysler did make significant market share gains at GM's expense, the latter still has a huge lead when you look beyond the Chevy Silverado. The GMC Sierra -- essentially an upscale twin to the Silverado -- accounted for another 40,546 domestic deliveries last quarter. By contrast, Fiat Chrysler doesn't have any other pickups in the market yet (though that will change soon with the arrival of the Jeep Gladiator midsize pickup later this year).

Counting both the Silverado and the Sierra, GM's full-size pickup deliveries exceeded Ram's by 29% in the first quarter. Adding in the Chevy Colorado and GMC Canyon midsize pickup models, GM delivered 195,307 pickups in the U.S. last quarter, trouncing Fiat Chrysler by 63%.

Chevy will gain as availability improves

Even looking at the Ram vs. Chevy Silverado comparison alone, Ram's victory last quarter was a bit misleading. GM and Fiat Chrysler both released upgraded versions of their light-duty pickups (e.g., the Chevy Silverado 1500 and Ram 1500) last year, but the Ram launch occurred first.

As a result, General Motors still didn't have full inventory of its new pickup models in the first quarter. The automaker noted that combined sales of the Chevy Silverado 1500 and GMC Sierra 1500 crew-cab models jumped 20% last quarter. Those were the first 2019 truck models to go into production for GM. But this was offset by lower sales of the cheaper regular-cab and extended-cab models, which didn't go into volume production until March.

Availability of these lower-priced versions of the 2019 Chevy Silverado should improve steadily over the next several months, driving a rebound in deliveries. Sales results in the second half of the year will provide a fairer comparison of how Fiat Chrysler's Ram trucks are doing compared to the Chevy Silverado.

Profitability matters, too

Another factor worth mentioning is that Fiat Chrysler appears to be resorting to huge discounts to boost Ram's share of the pickup market. Incentives for Ram trucks routinely reach $10,000 or even $15,000, whereas GM has stuck with more moderate promotions for the Chevy Silverado.

As a result, even if Ram trucks outsell the Chevy Silverado -- as occurred last quarter -- it's a safe bet that the Chevy Silverado franchise is far more lucrative. In the long run, the key question for investors is whether Fiat Chrysler is creating loyal customers who will continue to buy Ram trucks in the future regardless of pricing trends or if the company will need to keep offering aggressive discounts indefinitely to hold onto its market share gains.

To be fair, the 2019 Ram 1500 has received plenty of accolades, including being named the 2019 North American Truck of the Year. Thus, it wouldn't be surprising to see Ram gain some market share even without aggressive discounting.

Nevertheless, last quarter's results didn't reflect a fair comparison. By the second half of 2019, the Chevy Silverado will probably have a comfortable lead over Ram in the U.S. pickup market once again. And including all of its other pickup models, General Motors is likely to maintain a huge advantage relative to Fiat Chrysler for the foreseeable future.

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