Jeep News: Why is Jeep Not Doing So Hot In Sales?

[William Maley]

With crossover and SUV sales booming, you would think Jeep would be one of the big winners. But that isn't the case. The Detroit Free Press reports that Jeep sales are down 13 percent in the first half of 2017 - 406,291 vs. 465,243 in 2016.

Jeep CEO Mike Manley isn't worried. He tells the Free Press that the company knew sales would decline this year, but are expecting them to bounce back beginning in the second-half of the year with new and updated products. Some of the products include the next-generation Wrangler, Wagoneer, and updated versions of the Cherokee and Renegade.

"If you look underneath the numbers, we’re doing exactly what we said. We’re in plus or minus 1% of exactly where I thought we would be in the U.S," said Manley.

Part of this decline according to Manley is due to Jeep reducing fleet sales to focus more on retail sales.

But given the demand for crossovers and SUVs, Jeep's decline is something that cannot be overlooked. Morgan Stanley analyst Adam Jonas notes in a report last week that Jeep accounts "for roughly 45% of FCA’s sales, 55% of revenue and nearly 75% of FCA’s (operating profit)."

"That is Jeep’s territory where the market is right now … and they don’t seem to be capitalizing on it. 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.

Jessica Caldwell, senior analyst with Edmunds.com tells the Free Press that Jeep is facing tougher competition as more automakers throw their weight into the SUV/Crossover realm. 

“The issue now is that because SUVs are so popular in the market, other auto companies are heavily investing money in this space. Jeep has kind of always had that corner on this market, (but) a lot of other car companies are trying to encroach on their territory."

But Caldwell expects Jeep to bounce back partly due to new products, but also the Jeep name.

"Jeep is down, but given that they're an SUV brand, they're probably better poised to bounce back and it's not just one product that is going to help them do that, but the host of products that they have coming ... should definitely help,” said Caldwell.

"Jeep is much stronger than the FCA brand. People know exactly who they are and what they are. ... (It) gives them an advantage as long as they keep true to that identity."

Source: Detroit Free Press

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[G. David Felt]

While I totally understand what is being said here, the bigger challenge is not if but when Ford and GM bring in Wrangler equal products and continue to update their SUV/CUV product line that will eventually outperform Jeep. Jeep has the name, but FCA does not have the deep pockets to keep Jeep a true competitor to others.

I actually expect Jeep to stay on line with sales and maybe a 1% up tick as refresh comes out but I do not expect them to capitalize on how hot the SUV/CUV market is right now. The billions that could have really made Jeep, Ram, Dodge current and on fire has been wasted propping up Fiat and trying to bring Alfa back from the dead. Sergio the Idiot has destroyed what should have been a no brainer when he took the US brands over.

Very sad! 

[riviera74]

Sergio's loyalty has always been to FIAT, not Chrysler.  This is the same reason Daimler-Benz basically looted Chrysler after the 300/Charger twins came out.  The original sin is that Bob Eaton sold Chrysler back in 1998.  There are no REAL Chrysler advocates at the executive level; that is the real issue.  Jeep should be thriving, but it cannot unless the Italians are dumped from FCA forever.

As much as I hate to say this, FCA now is where GM was before they ditched Oldsmobile in 2004: too many brands, not enough sales and profit to justify any of it.

[smk4565]

Jeep doesn't have a 3 row SUV to get the family business.  And they are getting hit on all fronts by an onslaught of crossovers from other markers.  The real problem is most FCA products, much like many that Jeep has aren't all that good.  The Jeep Cherokee is a Dodge Dart underneath, look at how the Dart flopped.  Not surprised at all that a Rav4 or CR-V is outselling the Cherokee when those other brands have better, more reliable products.

Jeep has great brand image, but a lot of that leads to the Grand Cherokee and Wrangler sales, and both of those are still sort of in niche markets without a lot of competition.  The Compass and Cherokee have probably 15 other crossovers to compete with.

[Stew]

Jeep sales seem fine to me.  73k units last month with losing a model and updates for the Cherokee and a brand new Wrangler just around around the corner. 

22 minutes ago, smk4565 said:

Jeep doesn't have a 3 row SUV to get the family business.  And they are getting hit on all fronts by an onslaught of crossovers from other markers.  The real problem is most FCA products, much like many that Jeep has aren't all that good.  The Jeep Cherokee is a Dodge Dart underneath, look at how the Dart flopped.  Not surprised at all that a Rav4 or CR-V is outselling the Cherokee when those other brands have better, more reliable products.

Jeep has great brand image, but a lot of that leads to the Grand Cherokee and Wrangler sales, and both of those are still sort of in niche markets without a lot of competition.  The Compass and Cherokee have probably 15 other crossovers to compete with.

Incrrect.  Their sales are fine and the version of the platform under the Cherokee is VERY different than the dart.  It is losing sales, but it has went 4 years without major updates, which are coming, along with a more conventional front end from the spy photos seen.  Basically everything, but the Cherokee, the soon to be replaced Wrangler (which still moved over 28k units, has any Mercedes e ever moved that many just in the US in a month?) , and the Patriot which hasn't been built in literally months and was the main loss of sales. 

And the 3 row SUV is coming.  Along with the long waited pickup. 

[Frisky Dingo]

Jeep's problems are as follows-

1) Outside of the Wrangler and Grand Cherokee, nobody thought of them for purchase. Compass, Patriot, and Nitro sales were only ever on account of massive incentives and pushed on subprime buyers. Nobody with actual buying power was crosshopping with CR-V's Rav4's, etc.

2) The Wrangler sales model isn't and won't be sustainable. There's only so many people who want Wranglers. The demand for them will level off, and eventually recede. That's even counting if something major happens, like a spike in gas prices, etc.

3) They have no 3-row SUV. That is killing them.

4) They don't have vehicles far enough upmarket. Jeep needs vehicles playing at as high of a price point as they can get away with.

 

 

That said, I'm not sure this isn't overembellished  a little. The new Compass just dropped. People know a new Wrangler is coming, so many are probably holding out on it. They (maybe?) have a 3-row coming. It's not a total doom and gloom story.

[balthazar]

2) The Wrangler sales model isn't and won't be sustainable. There's only so many people who want Wranglers. The demand for them will level off, and eventually recede. That's even counting if something major happens, like a spike in gas prices, etc.

What am I missing? It's a 76-yr old vehicle that it instantly and universally recognizable from the 1941 model, currently selling at 200K units/yr. Sales have climbed steadily over the last 15 years (64K ~ 200K). And sales in '09 were the same as in '06 (82K), so the gas price spike didn't hurt the appeal at all.

3) They have no 3-row SUV. That is killing them.

I don't think "killing" is at all applicable here. Enclave & Traverse, for example, aren't putting up major numbers (60K & 115K) - I believe the 3rd row aspect is over-hyped.   

Jeeps is moving 800K plus units annually. There is no doom & gloom.

[oldshurst442]

@balthazar

LOL!

We cant seem to shake off the doom and gloom sales argument.  

3 minutes ago, balthazar said:

What am I missing? It's a 76-yr old vehicle that it instantly and universally recognizable from the 1941 model, currently selling at 200K units/yr. Sales have climbed steadily over the last 15 years (64K ~ 200K). And sales in '09 were the same as in '06 (82K), so the gas price spike didn't hurt the appeal at all.

 

3 minutes ago, balthazar said:

I don't think "killing" is at all applicable here. Enclave & Traverse, for example, aren't putting up major numbers (60K & 115K) - I believe the 3rd row aspect is over-hyped.   

Jeeps is moving 800K plus units annually. There is no doom & gloom.

I am in agreement with both of your points here!!!

Especially the 3rd row aspect being over-hype.

[regfootball]

Jeep really does miss out on the three row business. This is essentially the lucrative family sedan market of the olden days. 

Old compass was a fleet whore so less to fleets makes sense. 

Maybe Chrysler quality is catching up with them and word is getting around. 

[oldshurst442]

1 hour ago, Frisky Dingo said:

Jeep's problems are as follows-

1) Outside of the Wrangler and Grand Cherokee, nobody thought of them for purchase. Compass, Patriot, and Nitro sales were only ever on account of massive incentives and pushed on subprime buyers. Nobody with actual buying power was crosshopping with CR-V's Rav4's, etc.

2) The Wrangler sales model isn't and won't be sustainable. There's only so many people who want Wranglers. The demand for them will level off, and eventually recede. That's even counting if something major happens, like a spike in gas prices, etc.

3) They have no 3-row SUV. That is killing them.

4) They don't have vehicles far enough upmarket. Jeep needs vehicles playing at as high of a price point as they can get away with.

 

 

That said, I'm not sure this isn't overembellished  a little. The new Compass just dropped. People know a new Wrangler is coming, so many are probably holding out on it. They (maybe?) have a 3-row coming. It's not a total doom and gloom story.

I agree with everything except point #2 and #3.

Point #2

There will always be a Wrangler movement in the US and in the rest of the world. Its an icon on the same level as Mustang, Corvette and Porsche 911.

Even when all the poseurs and wannabes get bored with the Wrangler, there is enough real fans world wide to still out sell any other off road clone SUV from Ford, GM, Toyota, Nissan, Mercedes and any other.

Point #3

3rd row seating can fetch a few thousand more sales per year, I think its over-hyped.

Mid-sized sedans dont have 3 rows. And yes mid-sized sedans sales are going south big time, most mid-sized sedan buyers did not require 3 rows to make a switch to SUVs, their needs were just to be in a higher clearance vehicle.

 

 

[smk4565]

It isn't doom and gloom, they have a big world wide business, and Wrangler and Grand Cherokee do well as has been stated.  But what if Ford and GM come after the Wranger, they could lose some sales there, Toyota is coming for the Renegade, so that could hurt them too.

The big problem with Jeep is their profits are going to support dead weight money losing brands like Fiat and Chrysler and Dodge.  If Jeep is 45% of the sale, but 75% of the profit, Jeep is paying the bills for other's which limits how much they can reinvest in Jeep itself.  Overtime you can't support dead weight, See what GM did with Olds, Saab and Pontiac.  

[oldshurst442]

7 minutes ago, smk4565 said:

But what if Ford and GM come after the Wranger, they could lose some sales there, Toyota is coming for the Renegade, so that could hurt them too.

 

Ford actually built most of the WW2 Jeeps during WW2.

But in the late 1960s and 1970s, they had a Jeep competitor

Ford decided to make this into a family hauler. But I think the Jeep kicked the Broncos ass in the 1980s and that is why Ford changed the name to Explorer and mall parking lots were its domain.

GM also had a Jeep competitor. They also had Conan the Barbarian/T-100 Terminator/Governator peddle the SUV and brand full of toyish Hummers and well....the Wrangler became that much more of an icon

 Toyota....twice had a Jeep competitor. A reverse engineered job and a retro-model and while both were very good off roaders...the Wrangler spanked, kicked and bloodied Toyota's ass!!!

 

Hell....Mercedes Benz is trying hard to displace the Wrangler with this, but the crowd that buys this is of the prissy kind. Although the SUV is quite tough and capable, the owners of these are quite the opposite. Flakey, quakey, prissy and fake. M-B sells a few, but not quite as many as Jeep!

 

GM is afraid to let GMC have a go at it. Although GMC could make a go with it.

Ford is bringing out another Bronco, but it dont seem to be a head on Wrangler fighter nor a full on 1970s style off road bad assBronco....more like light off road look-a-like 1970s Bronco for hauling families. The Raptor is a Pick-up truck....

 

I think its safe to say that the Wrangler will remain champ for quite a while longer.

[oldshurst442]

The Jeep Wrangler won WW2 and is winning the battle for king of the off-roaders for 75 years.

LESSON TO LEARN:

Dont mess with a war hero!

Edited July 25, 2017 by oldshurst442

[smk4565]

The G-wagen is $98,595 more than the Wrangler.  The Nissan Versa is closer in price the the S-class than the Wrangler is to the G-wagen.  Not competitors.  

If GMC made a Wrangler competitor and the Bronco takes a few sales, Wranger sales could drop 50,000 a year.  Not going to break Jeep, but it is still less sales.  But as I said before Jeep has a few good cash cow products, but FCA has a dozen products that are losing money or they don't have the money to replace with a new one.  Jeep is strong, but how long can Jeep support Dodge, Chrysler, Fiat, Alfa Romeo and Maserati.  

[riviera74]

Jeep has supported Chrysler and Dodge ever since Chrysler bought American Motors back in 1987. 

As for the Italians, FCA should dump them, but Sergio would probably ditch Chrysler and Dodge long before he would dump FIAT, Alfa Romeo and/or Maserati.  It really sucks but the Italians are NOT carrying their share of the sales or profit load at all.

[balthazar]

2 hours ago, smk4565 said:

The G-wagen is $98,595 more than the Wrangler. Not competitors.  

Quote

Car data shows that in new auto sales, Jeep does equally well among people who are making less than ten-thousand dollars a year and those who make over half a million.

More data on Jeeps being in demand for the richest folk...

Edited July 25, 2017 by balthazar

[balthazar]

Another, and stating the GC garners plenty of trades from another 'non-competitor'- the Range Rover.

[smk4565]

The Grand Cherokee can run up to $60k range it should get some sales from luxury shoppers, especially anyone that actually wants to go off road.  As I said the GC is a hit vehicle for them and a cash cow.  But at the other end of the line they face more competition.  And if you don't have the money to update your line up, (see Dodge and Chrysler) then you start losing sales and then losing products.

[Robert Hall]

FCA has the mainstream 3 row market covered with the Durango, always wonder why didn't do a  lux Jeep version 5 years ago...a Durango reskinned w/ GC styling and interior could have been an easy path to a Grand Wagoneer.  (have 2 and 3 row models just like M-B w/ the M-class/GLE and GL-class/GLS). 

However, it sounds like their plan is build a Jeep Escalade---i.e. a SWB Wagoneer and a LWB Grand Wagoneer on the NG Ram truck platform...will be interesting to see what they come up with. 

Edited July 25, 2017 by Cubical-aka-Moltar

[balthazar]

1 hour ago, smk4565 said:

The Grand Cherokee can run up to $60k range it should get some sales from luxury shoppers

CG SRT starts @ $68K- I believe I read they sell close to $80K optioned.