Rough roads await Grand Cherokee

The all-new Jeep Grand Cherokee, unveiled at the New York auto show today, faces its toughest terrain yet.

The rough road includes consumers shying away from SUVs, critics who say Chrysler LLC has all but abandoned product development, and a government that will decide the automaker's financial fate at month's end.

Chrysler's reply is the redesigned 2011 Grand Cherokee, which will give consumers a more luxurious ride, with a comfier interior and more curves.

The Grand Cherokee is the flagship of the vital Jeep brand, but the SUV has been losing its relevance in the marketplace and to Chrysler's bottom line, a critical issue given the company's dire financial straits. In three weeks, the U.S. government will decide whether to loan Chrysler another $6 billion to avert bankruptcy and likely liquidation.

Regardless of what happens then, Jeep is likely to live on. It has for 69 years.

The rugged brand with military roots has outlived Willys-Overland Motors, Kaiser-Jeep Corp., American Motors Corp., the former Chrysler Corp. and DaimlerChrysler AG -- and despite recent quality problems, it is still considered a valuable asset.

Within Jeep, Wrangler is the icon, but the Grand Cherokee is the flagship, said Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide in Northville.

This is the fourth generation of the SUV that was introduced in 1992 and quickly became a volume and profit powerhouse as consumers embraced a top-of-the line Jeep. Sales of the 2011 model are to begin early next year. It will be assembled at the Jefferson North plant, which expanded its body shop in preparation.

In its heyday, Jefferson North was pumping out high-margin Grand Cherokees three shifts a day, said Joe Phillippi of AutoTrends Consulting Inc. in New Jersey. Sales exceeded 300,000 in 1999, according to Ward's AutoInfoBank.

But the SUV fell victim to "an enormous drop-off in demand for all types and flavors of SUVs," Phillippi said.

And Chrysler has suffered, too. The U.S. Treasury's auto task force, in its viability determination released March 30, noted all three of Chrysler's brands fall in the bottom 25 percent in recent J.D. Power surveys and none of its nameplates are currently recommended by Consumers Reports.

In 2008, Grand Cherokee sales fell to 73,700. "It's really not carrying its weight," Phillippi said.

Now, the Grand Cherokee attempts to restore the former glory.

"We invented the segment," said Ralph Gilles, Chrysler's head of design. "Now we need to reassert our dominance."

Particular care has been given to the materials used and how well they are put together. Chrysler says the off-road SUV now performs better on city streets. The underpinnings of the new Jeep are shared with the Mercedes-Benz M-Class and the SUV is longer, wider, taller, more aerodynamic and has more ground clearance. It also has a suspension that can be adjusted to the terrain.

The SUV also gets better gas mileage. The 2011 Grand Cherokee is the first Chrysler vehicle with an all-new family of V-6 engines known as Phoenix, to be renamed Pentastar, The Detroit News has learned. The 3.6-liter in the Jeep provides 65 more horsepower than the 3.7-liter engine it replaces, and Chrysler says it is 11 percent more fuel-efficient. It is expected to get 16 miles per gallon in city driving and 23 mpg on the highway. A Hemi V-8 is also available.

"The Grand Cherokee is still a key vehicle for the brand and Jeep is still one of Chrysler's more valuable pieces of the puzzle," Robinet said.

The launch is also important because Chrysler's future lineup is thin. "There's not a lot in Chrysler's pipeline," Robinet said, beyond a new Chrysler 300 and Dodge Charger next year and low-volume electric vehicles. "It is critical to show they are still developing vehicles."

"They need to make some noise," Phillippi agreed, even though an SUV is "probably not the vehicle you want to make noise with."

Completion of a partnership with Fiat SpA by month's end would broaden the portfolio, providing much-needed smaller vehicles and engines in 2011.

The Italian automaker also is interested in the success of the Grand Cherokee.

"Jeep is an icon in Europe," said Fiat spokesman Gualberto Ranieri. He said the brand equity is positive in Europe and Latin America, where Fiat has a strong presence. With the advantage of Fiat's distribution, "there is a lot of potential for growth in terms of sales."

apriddle@detnews.com">apriddle@detnews.com (313) 222 -- 2504