Jeep Wagoneer S Trailhawk EV concept
Michael Wayland / CNBC
DETROIT – Stellantis“The Jeep brand is known for climbing difficult terrain, but the latest challenge of selling one million vehicles domestically by 2027 will be a steep climb.”
Jeep, a coveted brand in the automotive industry, is in the midst of a sales slump in the U.S. that has seen five years of annual sales declines, and 2024 could potentially be the sixth year.
Still, Jeep CEO Antonio Filosa believes the brand's worst days are behind it and the one million sales target can still be achieved. The company is implementing a turnaround plan for the quintessential American SUV brand, which he says is already starting to pay off after U.S. sales fell 9% in the first six months of the year.
The plan includes price cuts across the product range, including high-volume models such as the Jeep Compass and Grand Cherokee SUV, the introduction of special offers such as incentives or 0% financing, and increased spending on marketing and advertising, Filosa said. It will also hold a roadshow with dealers to address other issues and concerns.
Such moves can cut into profits, but the brand's average transaction prices have risen from less than $40,000 in 2020 to more than $50,000 this year, according to Cox Automotive. Jeep's average transaction price has been above the industry average since 2021, Cox reports.
“The good news is that the measures we have implemented in recent months are also leading to significant growth in the United States,” Filosa said in a virtual interview with CNBC on Monday.
Filosa's comments came a day before the chairman of the Stellantis National Dealer Council penned a scathing open letter attacking Stellantis CEO Carlos Tavares over the company's revenue losses and other business decisions.
Stellantis sold more than 1.5 million vehicles in the U.S. last year, down about 1% from 2022. That compares to an industry-leading 13% increase in 2023.
Jeep sales
Filosa said Jeep, which reports its sales figures quarterly, saw an increase in sales in the U.S. last month: They rose 28% from August 2023 and 55% from July. Jeep also reduced its vehicle inventory by about 25,000 units during that time. But the brand still has a long way to go to achieve a significant turnaround in sales.
Jeep's sales in the U.S. have plummeted 34% from an all-time high of more than 973,000 SUVs sold in 2018 to fewer than 643,000 units last year. While most auto brands increased their sales last year, Jeep saw a decline of about 6%.
The New York Stock Exchange will welcome the Jeep brand (NYSE: STLA) to the podium on May 31, 2024. To honor the occasion, Antonio Filosa, Chief Executive Officer, will ring the Opening Bell® along with Lynn Martin, President of the NYSE Group.
NYSE
The recent declines follow the company's discontinuation of production last year of the entry-level Renegade and the Cherokee compact SUV – two mainstream models with peak U.S. sales of around 300,000 units annually between 2016 and 2019.
“For us, the loss of the Jeep Cherokee … and the Jeep Renegade was a big blow,” Filosa said. “Our market coverage went from an average of 80% to 45%.”
Filosa said Jeep expects to regain its market share “very quickly” and return to 80 percent market share by the end of next year, which includes the segments in which Jeep competes, at which time it will unveil an as-yet-unnamed successor to the Cherokee as well as new electric models.
I am looking forward to
In addition to discontinuing new models, Stellantis brands such as Jeep focused more on profit than market share during Tavares' tenure as CEO.
Tavares has been on a cost-cutting mission since the company was created through a merger between Fiat Chrysler and France's PSA Groupe in January 2021. This is part of his “Dare Forward 2030” plan to increase profits and double sales to 300 billion euros ($325 billion) by 2030.
As part of this plan, Jeep aims to sell about 1.5 million SUVs worldwide by 2027, including 1 million in the United States.
To achieve these goals, Tavares said that after discussions with the company's dealers earlier this year, he had relaxed some prices, incentives and other financial targets.
Filosa said he will continue those efforts by meeting with dealers about the turnaround initiatives. He will participate in a dealer roadshow with the brand's new North American chief, Bob Broderdorf, starting next month.
Stellantis CEO Carlos Tavares photographed next to a Jeep Avenger at the Paris Motor Show on October 17, 2022.
Nathan Laine | Bloomberg |
Jeep, which is the largest seller of plug-in hybrid electric vehicles in the U.S., will also launch several new vehicles. The brand will launch the all-electric Wagoneer S later this year, followed next year by a Jeep Wrangler-inspired “Recon” SUV and extended-range plug-in versions of the Wagoneer and Grand Wagoneer large SUVs.
In anticipation of such vehicles, Jeep has increased its media spending by 20% compared to the first half of the year, according to the automaker.
“Now is the time to boost and accelerate sales to recover as much as possible. [they] Next year we will of course only have growth because we have new products. … I think [next year] will be a completely different story,” said Filosa.
Jeep is also trying to improve the quality and reliability of its vehicles, which have historically underperformed in third-party evaluations. He said that includes delaying the launch of the upcoming Wagoneer S and Recon models by four to six weeks.
But building trouble-free vehicles is easier said than done in the auto industry. Jeep confirmed Monday that it is cooperating with U.S. regulatory authorities in an investigation of more than 781,000 newer Jeep Wrangler and Gladiator SUVs following reports of under-hood fires.
2024 Jeep Wrangler JK
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Filosa confirmed he was aware of the investigation but declined to provide further details. Tavares had pointed to quality problems within the automaker earlier this year, particularly at a plant in a Detroit suburb that makes the company's Ram 1500.
“We are closely monitoring the quality development of the Jeep Wagoneer S at the factory, as well as that of the Jeep Recon,” said Filosa. “The only requirement I give the factories is to not deliver the car until it is of perfect quality.”
The new all-electric SUVs will be manufactured at Stellantis' Toluca assembly plant in Mexico. The company has not yet confirmed a production location for the successor to the Cherokee SUV, which was manufactured at a currently closed plant in Illinois.
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