Bloomberg News

Chrysler Opens Dealer Orders for Natural Gas Ram Pickup

October 14, 2012

Chrysler Group LLC, the automaker controlled by Fiat SpA (F), is making its natural gas-powered Ram pickup available for sale to retail buyers, according to the head of the company’s dealership network.

Chrysler began allowing all dealers to order the Ram 2500 Heavy Duty CNG pickup in September, Peter Grady, vice president of network development and fleet, said in an interview. Chrysler, which initially made the truck available only to fleet buyers, joins Honda Motor Co. (7267) as the only automakers selling compressed natural gas vehicles to U.S. retail consumers.

“The dealers have been asking for it, they’ve been clamoring, particularly in the natural gas states and in some of these places where you’re starting to get infrastructure,” Grady said in an interview at his office in Auburn Hills, Michigan, where Chrysler is based. States where the fuel and infrastructure are most available include California, Oklahoma, Louisiana, Texas, Ohio and Pennsylvania, he said.

Sergio Marchionne, chief executive officer of Chrysler and Turin, Italy-based Fiat, has argued that natural gas engines are cheaper and more viable than plug-in hybrid and electric cars. The battery-electric Fiat 500, scheduled to start production later this year, will generate losses of about $14,000 per unit sold, Marchionne said last week in London.

“The electric technology just isn’t advanced, it’s not there, and there’s so much innovation that’s required to make it viable,” Grady said. “We’ve got to be there in some fashion, whether it’s hybrids or whatever, but right now, compressed natural gas is here.”

Fiat’s Standing

Fiat is the market leader for compressed natural gas vehicles in Europe, with about 90 percent market share in Italy. Sales of vehicles fueled by natural gas and propane surged 90 percent to 114,226 vehicles through August, accounting for 11.6 percent of the market. That’s up from a 4.9 percent share a year earlier.

Under U.S. fuel-economy standards released Aug. 28, natural gas-powered vehicles were made eligible for credits aimed at reducing emissions. Chrysler testified to the Senate’s Energy and Natural Resources Committee in July and advocated for parity between natural gas-powered cars and trucks and other alternative-fuel vehicles.

Chrysler’s Ram 2500 Heavy Duty CNG pickup features both compressed gas storage tanks and a conventional gasoline fuel tank, the company said in a March 6 statement. The truck, which starts at $47,500 including a $995 destination charge, is designed to go 255 miles (410 kilometers) on compressed natural gas before switching to the 8-gallon (30-liter) reserve tank, extending the range to 367 miles.

Industry Buyers

“Our strategy on our investment in this product was really predicated on the natural gas industry,” Grady said. “We came up with the truck because that’s the one that they said they would like to do. They’ve embraced the truck.”

Chrysler now is seeing interest beyond buyers in the natural gas industry, he said. Additional potential fleet and commercial buyers include waste and transit companies as well as airport shuttles.

The automaker also is getting demand from states looking to add the pickup to their fleets. Chrysler said in an Oct. 5 statement that 13 of its Ram truck dealers reached contracts with 19 states to supply their fleets with the truck.

Honda is the only automaker selling cars with compressed natural gas engines to retail customers in the U.S., with its $26,305 Civic Natural Gas sedan. The Tokyo-based automaker last week said it would offer $3,000 debit cards for customers to use toward purchasing the fuel in a promotion with Clean Energy Fuels Corp. (CLNE:US), the largest owner of U.S. natural gas stations.

To contact the reporter on this story: Craig Trudell in Auburn Hills, Michigan, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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