Jeep mega-brand transforms Fiat Chrysler's future
The Detroit auto industry is undergoing historic change as General Motors and Ford place big bets on the future of mobility with bold investments in autonomous and electric vehicles.
But perhaps the most fundamental change in Detroit is coming from the smallest of the Big Three, Fiat Chrysler Automobiles, where a new Jeep mega-brand has emerged to put the company on its firmest footing in decades.
Traditionally the most fragile of the home automakers, the now Italian-owned company has needed transfusion from the U.S. government twice in the last 40 years as its volume Chrysler and Dodge brands struggled to stay afloat in a market besieged by cheaper, more reliable Japanese imports.
That has changed dramatically this decade as Jeep has emerged as the company’s volume brand and Chrysler and Dodge have faded to niche status. Indeed, Jeep was the badge that kick-started the SUV revolution three decades ago. Today, it is not only considered the pre-eminent utility brand with the highest transaction prices in segment, it is one of the most recognized brands in the world.
"The foresight that the leadership team had five or six years ago was genius,” says Jeep North America chief Scott Tallon. “It was the right time to make those decisions and let them develop, and we have been very fortunate and we will stay hungry in the marketplace.”
Significantly, this brand-build has been the focus of Fiat Chrysler's expansion efforts – not autonomy or electrification, like its Detroit peers.
FCA CEO Mike Manley says Jeep is committed to offering autonomous and electric features in its vehicles by 2021, but it is not on the expensive, technological frontier with new brands and platforms like GM (GM Cruise/new EV platform). It appears content, instead, to partner with other companies (Waymo) on autonomy while offering hybrids on existing gas-powered platforms.
Jeep sales numbers tell the story.
As Chevy and Ford retrench — eliminating sedans and closing factories — Jeep is actually expanding into two new high-volume segments and building a new Detroit factory. This spring, Jeep enters the midsize pickup market with the Gladiator, a formidable truck based on the iconic Wrangler SUV — but with significant bed and towing capability. And Jeep will also soon go head-to-head against its Detroit rivals in the super-sized, three-row SUV market with the Wagoneer and Grand Wagoneer.
This continues Jeep’s rapid transformation into Fiat Chrysler's volume brand with sales of nearly 1 million units in 2018, up from just 441,000 15 years ago.
Internationally, Jeep sales have soared to over 1.5 million. FCA CEO – and former Jeep boss – Mike Manley is bullish about Jeep’s position.
“We believe (IHS Markit's) global industry forecast for 2022 of 37 million," he told investors last year. "By 2022 we are targeting one Jeep sale for every 12 UVs sold in the world with a future vision of one in five. That compares to 1 in 23 in 2009.”
So rapid is Jeep growth in Europe that it announced a deal with Tesla this week to offset the emissions from its red-hot SUV sales.
Compare apples-to-apples sales of the Chevy and Jeep brands in 2018, and the numbers were very close. Remove pickup trucks (Jeep didn’t sell any) and the three sedans that Chevy is discontinuing (Cruze, Impala and Volt), and Chevy sold a total 974,105 sedans and SUVs in 2018. Jeep sold 973,227 SUVs.
“Our clear mission is to be a full-line SUV brand and expand into segments where it makes sense for Jeep,” says Tallon. “And pickups are a natural extension.”
Veteran Wall Street analyst Joe Philippi of Auto Trends Consulting says that the sky is the limit for Jeep, given its rare status as a brand that appeals to mainstream and premium buyers alike.
“FCA is just starting to leverage the Jeep brand,” he says. “(Ex-CEO Sergio Marchionne) and Manley worked behind the curtain to push the organization to broaden Jeep’s portfolio. Sergio always had a soft spot in his heart for Jeep. He understood what the brand meant.”
Given the brand’s strength, Phillippi also believes that Jeep and Fiat Chrysler don’t need to invest in EVs the way GM and Ford are doing. He says that EVs will become viable when batteries become a reliable propulsion source.
“When that opportunity comes, then Jeep has the brand strength to develop an EV platform,” the analyst says. “They can let the other guys spend the money on developing battery tech.”
With Jeep still an SUV brand, Fiat Chrysler is vulnerable should the market shift back to sedans as it did in the 2009 Great Recession. But most auto analysts — as well as companies’ internal predictions — see a permanent shift to SUVs as well as long-term, stable, cheap energy prices.
If that’s the case, says Phillippi, then Fiat Chrysler has another ace up its sleeve with Ram, which has been expanding its truck market share as well as its brand cred.
“With Jeep and Ram as their volume vehicles, FCA is more valuable than ever,” he says. “And they are in apposition to expand Ram as and SUV brand just as GM has done with its GMC truck brand.”
Henry Payne is auto critic for The Detroit News. Find him at firstname.lastname@example.org or Twitter @HenryEPayne. Catch “Car Radio with Henry Payne” from noon-2 p.m. Saturdays on 910 AM Superstation.