The interior of a Ram pickup these days is akin to that of a luxury vehicle, with ample leather and wood and an infotainment system controlled by an expansive 12-inch touch screen.
It’s an experience that’s commanding an ever-higher price tag amid an ongoing supply crunch that has hampered production across the industry. Stellantis saw its transaction prices rise 21 percent in the first quarter, to nearly $53,000, according to TrueCar Inc., compared with a 16 percent increase for the industry overall.
Ram’s pickup line had an average price of $62,313, up 13 percent year over year, according to Cox Automotive.
“We’re able to command strong pricing right now,” Ram brand CEO Mike Koval told Automotive News at the New York auto show last month. “Obviously, this imbalance of supply and demand, that’s not going to last forever, so we need to stay very disciplined [and] keep our fixed costs under control because at some point that’s going to end.”
Once the microchip shortage eases, Koval said, “we’re going to start to see downward pressure on pricing, but we’re not going to want to lose those margins and that profitability.”
The market conditions that have led to higher prices for Stellantis have occurred in tandem with the automaker’s quest to move Jeep upscale. The utility brand is vying for a place in pricier segments with the three-row Grand Cherokee L and Wagoneer line that went on sale last year.
Jeep, according to Cox, had five vehicles transacting for more than $50,000 in the first quarter, led by the Grand Wagoneer’s $96,802. The Grand Cherokee jumped to $51,471 with the addition of the three-row model.
Ivan Drury, senior manager of insights for Edmunds, said Jeep could find a willing crowd of buyers who want upscale amenities without the showiness of a full-blown luxury brand as it continues its upmarket journey.
“Some people don’t actually like luxury cars; they like luxury features,” Drury said. “They like luxury looks, but they see it as an unnecessary spend or that you’re being a little too flashy. I think that you can cater to that crowd with a Jeep-branded vehicle because it’s still technically mainstream. At the same time, it’s providing virtually everything a luxury purchase would.”
On top of higher prices, Jeep has trimmed incentives to their lowest levels in years, keeping with an industrywide trend. Cox data shows that Jeep halved incentive spending per vehicle to $1,689 in the first quarter after never falling below $3,000 in the first quarter of each of the past six years.
The story was the same for Ram. Cox said the truck brand slashed incentives by more than a third in the quarter, to an average of $3,887. Ram hadn’t dipped below $5,000 in the first quarter for at least seven years.
“Incentives have been kept low; marketing is kept under check,” Koval said. “I think we’re doing a very good job of managing the business as it is. Playing with the hand we’ve been dealt, if you will, and that manifests itself in the average transaction price and market share.”
Overall, Stellantis cut incentives by 56 percent to an average of $2,420, Cox said.
Jeep’s average transaction price — up 29 percent from a year earlier to $50,332 in the first quarter, according to TrueCar — isn’t likely to dip too much even if the chip shortage subsides and pricing for the market normalizes, said Nick Woolard, lead industry analyst at TrueCar.
Jeep has “been adding to that top end, so I think it’s not going to come crashing down anytime soon, that’s for sure,” Woolard said. “That brand has been moving up for a while now.”
Randy Dye, chairman of the Stellantis National Dealer Council, sees the fast-rising transaction prices as a sign the automaker is building what consumers want to buy.
Dye said tight inventory has caused his dealership, Daytona Dodge-Chrysler-Jeep-Ram in Daytona Beach, Fla., to miss out on a good number of deals each month because demand is outstripping supply. But some customers are deciding to order exactly what they desire, even if it takes time to get their vehicles.
Dealerships these days have to be good at selling what’s on the lot, Dye said, but they need to be just as good at showing customers what they can get by ordering and waiting.
“We’re not in the industry right now advertising the least-equipped model that you can find or make. That’s not the one that people want to buy,” Dye said. “I think that’s driven the transaction up as well. The transaction prices have gone up because we’re just buying a richer mix.”
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