Factory air intake assembly on 1996 Ram 1500 5.2 liter, I have a dumb question, How is this engine getting air with this setup, I'm thinking bout an upgrade for this

 

It draws cold air from the fender. It actually works fairly well. A so-called "cold air intake" won't make any difference at all. You already have one. Keep a good filter in it, and that's all ya need.

Check out the second gen ram section.

 

Welcome! Thats a snorkel to the fender as Brian mentions. It works well.