Amid falling sales, Jeep looks to reinvent itself
Jeep has been Fiat Chrysler Automobile’s most dependable growth engine in recent years, but the division has hit a bump in the road.
The question now is whether Jeep has encountered a mere pothole or a full roadblock when it comes to continuing to power Fiat Chrysler’s sales and profits.
At a time when SUV sales are soaring, the brand should be flying high in the U.S. Gas prices are low, car sales are declining and consumers are snapping up trucks and SUVs with gusto.
Jeep’s U.S. sales, however, have dropped 13% over the first half of the year in the U.S. to 406,291 compared with the same period in 2016.
Cox Automotive shows the brand losing the most market share this year of any of the 20 non-luxury brands it rated in a recent report. Through June, Jeep’s share of U.S. auto sales was 4.8%, down from 5.4% for the first six months of last year, according to Autodata.
Yet there is no denying how important Jeep is to Fiat Chrysler. Even with the decline, it’s the best-selling brand in the company’s stable, with sales four times that of Chrysler and almost 28 times that of Fiat in the U.S. It represents more than 38% of the Auburn Hills automaker’s sales.
The company knew sales would decline this year and will rebound as Jeep rolls out a strong roster of new and updated vehicles, predicts Mike Manley, head of Jeep and Ram.
“If you look underneath the numbers, we’re doing exactly what we said,” Manley said. “We’re in plus or minus 1% of exactly where I thought we would be in the U.S.”
Jeep also remains on target to hit the company’s goal of selling more than 2 million Jeeps globally by 2018. That would be four times what the brand sold in 2008.
“Most investors we speak with do not know how significant Jeep is to the (Fiat Chrysler) group,” Morgan Stanley analyst Adam Jonas said in a report last week.
Jonas said Jeep will account for about 45% of Fiat Chrysler’s sales, 55% of revenue and nearly 75% of Fiat Chrysler’s operating profit.
This year, Fiat Chrysler replaced two Jeep SUVs — the old Compass and Patriot — with a new Compass and has strategically reduced sales to corporate and rental car fleets in order to focus on more profitable sales to individual customers.
Jeep also has a robust lineup of new products and key updates on the way over the next four years. Those plans include:
The Cherokee, which started rolling off the line last month in Belvidere, Ill., after production was moved from Toledo, is scheduled for a refresh in the first quarter of next year.
An updated version of the Renegade in 2018
The brand’s flagship model — Wrangler — is likely to be unveiled later this year at the Los Angeles Auto Show.
A Jeep pickup truck planned for 2019
“Yes, Jeep is an iconic ( brand), but I think them being down what it has been is surprising,” said Michelle Krebs, executive analyst at AutoTrader.com. For Fiat Chrysler to succeed, “they need to get Jeep back into the prominent position it had been in.”