Chrysler Group LLC announced that it will offer a diesel in the standard-duty Ram 1500 pickup in the third quarter this year, making it the first modern half-ton pickup in the U.S. market with a diesel power option.
According to a report in USA Today, that should attract a significant number of buyers, because while a diesel typically costs more than a gasoline engine up front, it uses less fuel, has greater pulling power, often lasts longer and has higher resale value — dollars-and-cents issues important to business users who account for many pickup sales.
Ram’s internal studies show that “customers have been emphatically asking for this, thirsting for it, craving it,” said Fred Diaz, CEO of Chrysler’s Ram brand in a phone interview from Mexico (Diaz is also CEO of Chrysler de Mexico).
He wouldn’t forecast sales, but said, “The business case (for Ram) is a positive one. This isn’t just a little side note. We plan to do good business with the diesel.”
That’s because he thinks the pool of half-ton diesel buyers is deep. “This isn’t a one-and-done or a fad,” he said.
Diesels have been limited for decades to heavy-duty pickups, the so-called three-quarter-ton and higher-duty models, which are more expensive than standard-duty trucks — even before adding the $8,000 or so price premium for the heavy-duty diesel option. And those trucks are larger, making them more cumbersome to drive and maneuver.
Being first with a standard-duty diesel pickup could attract 10,000 additional buyers the first year, more after that — if the price is right — predicts Jesse Toprak, veteran industry watcher at TrueCar.com.
He thinks Chrysler should “make a big noise” by offering the diesel at little or no price premium vs. gasoline engines.
That would be unheard of in the truck business — and unlikely in this case. “We think customers will be satisfied with the value proposition” after considering price, mileage and towing and hauling capacities, Diaz said.
He wouldn’t comment on pricing, though, or give power and mileage ratings for the diesel. The engine will be a 3-liter turbo V-6 from Italy’s VM Motori, which has supplied diesels to Chrysler since 1992. It’s the same engine that Chrysler had said it would offer in the Jeep Grand Cherokee, starting in May.
Columbus, Ind.-based Cummins Inc. today reported record sales, profits and cash flow from operations for all of 2011 as well as strong results for the fourth quarter.
Fourth-quarter revenue of $4.9 billion increased 19% from the same quarter in 2010 and set a new quarterly record for the diesel engine builder. The increase year-over-year was driven by higher demand in truck, construction, power generation and oil and gas markets in North America. The company also experienced strong growth in global mining markets. Growth in these markets offset weaker demand in the construction market in China and power generation in India.
Fourth-quarter net income jumped to $548 million, or $2.86 a share, from $362 million, or $1.84 a share, a year earlier. Excluding some items, profit was $2.56 a share, compared with $2.24.
Earnings before interest and taxes (EBIT) was $768 million for the fourth quarter. Excluding special items, EBIT was $677 million or 13.8% of sales, representing a 25% growth in earnings year-over-year.
Revenue for the full year was $18 billion, up 36% from 2010, with strong growth in most geographic regions.
Net income attributable to Cummins for the full year was $1.85 billion ($9.55 per diluted share), up from $1.04 billion ($5.28 per diluted share) in 2010. EBIT for the year, excluding special items, was $2.56 billion or 14.2% of sales, compared to $1.66 billion or 12.5% of sales in 2010.
“Cummins had its best year ever in 2011, despite economic uncertainty in a number of regions. We continue to benefit from our leading position in a number of end markets and geographies,” said Tom Linebarger, chairman and CEO. “Revenue in the United States grew 53% and international revenue grew 27% year-over-year. In fact, we experienced record full-year revenues in North America, Brazil, China, India and a number of other important markets.”
Based on the current forecast, Cummins anticipates that total revenues will increase 10% in 2012, with EBIT in the range of 14.5% to 15% of sales.
“Our 2011 results and our forecast for 2012 reaffirms our confidence in reaching our goal of achieving $30 billion in sales and 18% EBIT in 2015,” Linebarger said.
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