By on June 29, 2015

2014 Jeep Grand Cherokee SRT

Jeep is looking at global growth upwards of 20 percent this year to 1.2 million units and that’s before the brand truly ramps up in China.

Could it be possible Jeep’s success is hiding what ails other brands at the newly-formed Fiat Chrysler Automobiles?

Jeep is on track to record a best ever year in 2015 in terms of unit sales with many of the brand’s models returning higher profit margins than those at other marques under the FCA umbrella. However, there are still problems reports The Detroit Bureau, like the struggles with where to build Jeep’s next generation Wrangler.

“It’s a very important and very sensitive decision,” stated Michael Manley, president of the Jeep brand.

The utility-lifestyle brand is also running at or near capacity at their plants, just keeping up with demand, all the while being leveraged in order to prop up other brands financially. Money once meant to redesign the Grand Cherokee has been earmarked for Alfa Romeo. This seems to be true for other models at Jeep as well. On top of it all, Sergio Marchionne wants a Range Rover rivaling Jeep to conquest even greater transaction prices. If such a model existed, FCA could use even more cash to fuel development of new and redesigned models at other brands, but it seems Marchionne might be counting his chickens before they hatch as he drives Wrangler-loads of cash to Italy before such a Range Rover-ish model can come to fruition.

At some point, FCA’s Jeep gravy train is going to come to a halt, and dumping money into brands that look to only stroke the ego of FCA executives – instead of just dumping the brands themselves – will result in what Marchionne has been saying is the cardinal sin of the automotive industry: wasted capital.

Maybe the best way to save money, Mr. Marchionne, is the reduce the number of brands emblazoned on those dealer signs.

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35 Comments on “Is Jeep Carrying The Rest of FCA?...”


  • avatar
    28-Cars-Later

    In short, yes. However Fiat is a European company and if Pch is correct in his thesis on shoring up things in Europe to compete with VAG, Jeep/RAM will continue to subsidize the near failed Euro marques.

  • avatar
    thornmark

    Yes.

  • avatar
    Steve Biro

    Well, the European arm of the company was there for Chrysler at the beginning of the marriage. Now, it’s the other way around.

  • avatar
    Pch101

    It’s the wrong way to look at it. Major automakers will always have a few products that dominate the lineup.

    The automotive business is an exercise in amortization. If FCA was comprised solely of Jeep, then it would be a loser because that wouldn’t be enough to cover its overhead.

    Not everything in the lineup can be a home run, nor does it need to be. You wouldn’t try to operate a baseball team on the premise that every ball had to be hit out of the park or that base hits can’t add up to a run.

    The better question is whether FCA has other opportunities to expand its footprint and/or build margin.

    • 0 avatar
      heavy handle

      Exactly,

      FCA can’t be a one-trick pony. They will get more benefit from working on the low-hanging fruit than they will from fiddling with Jeep.

      They’ve presumably run the numbers and found that there was the most potential return from having a go at the premium/near luxury markets.

      Besides, who’s complaining about them developing a new top-tier RWD platform? I wouldn’t be surprised if we see a lot of that development effort used in the next JGC.

      • 0 avatar
        Pch101

        The irony is that Cerberus’ plan for Chrysler was to focus on what Chrysler did best (trucks, minivans) while outsourcing the rest (cars), and that was a failure.

        That was an idea that was straight out of the standard private equity handbook, but that was completely divorced from the realities of the car business. Great on paper, terrible in practice.

    • 0 avatar
      MBella

      I have to agree. The new Alfa platform will likely use plenty of parts out of the FCA part’s bin. If anything, the new platform will also likely make it’s way in some form or another, into RWD Chrysler products. The cost likely won’t be that crazy high, and luxury cars have more meat on the bone to discount than compact cars like the Dart.

  • avatar
    ATLOffroad

    I am never a fan of headlines in the form of a question. I do hope Jeep’s success will fuel more development within Jeep and not go to other less profitable divisions.

  • avatar
    bball40dtw

    Is the F-Series carrying Ford?
    Is the K2XX carrying GM?
    Are things based on the Civic and Accord carrying Honda?
    Are things based on the Corolla and Camry carrying Toyota?
    Is the Mirage carrying Mitsubishi?

    • 0 avatar
      whynot

      No
      No
      Yes (depending on how related you are talking about i.e. are you considering the CRV based on the related Civic?)
      Yes (depending on how related you are talking about) but not as much as Honda
      Yes, at least in US.

      Edit: actually wrong about Mitsu. The Outlander/ Outlander Sport sell better than I thought.

      • 0 avatar
        bball40dtw

        The Mirage was a throwaway question. Nothing is actually carrying Mitsu in the US. It’s all sinking it.

        • 0 avatar
          CoreyDL

          I saw a (I think) premium trim Outlander Sport in white, and it really caught my eye. Not a bad looking car, even if it’s a bit small. I can see the appeal there, though I’m betting the interior is a letdown.

          Edit: An Outlander Sport 2.4 AWD with leather (only available as part os $4000+ GT Package) comes out to $30,000. That’s a problem.

  • avatar
    Eyeflyistheeye

    This reeks of Roger Smith-era GM thinking. If the Giulia was going to come out next month, that’s one thing. If the Giulia won’t make it to American shores anytime during the remainder of the Obama administration, that’s a very big problem.

    • 0 avatar

      I’ve heard Fall 2016 is the on-sale date in the US for the Guilia.

      • 0 avatar
        whynot

        So we have to wait over a year for the Guilia?

        FCA really needs to work on their product reveal- they blow their PR momentum by revealing the car way too early and get so vague about when the car will actually be released that people either A) get frustrated and move on, or B) think the car is already out when they start the launch ad campaigns.

        see: Renegade

        • 0 avatar
          MBella

          I call this the Camaro approach. They were flooding the internet and magazines with pictures and videos for years before launch, that by the time it was actually available for sale, it was old news. They still sold a bunch of them.

          • 0 avatar
            Eyeflyistheeye

            GM was this close to jumping the shark on the Camaro, showing it every five minutes for a good year or so until it went on sale.

            However, the Camaro is a Camaro, and there will always be people who want a Camaro and won’t be satisfied with a Mustang, Challenger or Genesis Coupe. Heck, I used to date an Aussie whose family owned a Commodore which she drove sometimes, but lusted badly over the Camaro even though she knew it was the same basic car underneath. I’d argue the Camaro sells more on emotion than anything else. Alfa is supposed to sell on emotion too, but it’s hard for the general public to feel anything when they don’t even remember them or know who they are.

            I seriously hope that Sergio and Olivier Francois didn’t think that people would be as excited about an Alfa Romeo as they were about a Camaro or Challenger, but knowing how egotistical they are, it can’t be ruled out that they were so confident that people would be lusting over the Alfa that they would delay their plans to buy a competing sport sedan because the Giulia was sooooo revolutionary and awesome.

            Unfortunately for Sergio and friends, the Giulia, at least appearance-wise, is a perfectly acceptable sport sedan for 2015 without that much distinction from its competition, but the target buyer for it won’t wait forever. While the Camaro automatically had thousands of people waiting to relive the days of their Z-28, IROC-Z or SS, there are probably about 16 people in the United States who want to relive the halcyon days of when they owned an Alfetta, Milano or 164.

            And the worst thing is FCA was adamant in competing in the most cutthroat segment of the North American automotive market, with the Germans offering ridiculous lease deals and the Japanese, Cadillac and Jaguar forced to follow.

            And then, that potential Giulia buyer will be out of the market, justifying to themselves that the Giulia wasn’t going to be much better if at all or satisfied that they bought from a more established brand. And for the Alfa geeks, I’m sure the poor reputation of the Dart (which unfortunately, is all too obvious in its design that it’s the Giulia’s cheaper, mentally-impaired distant relative from the same corporate family) along with the botched execution of FIAT in the United States isn’t exactly giving them reason to wait…

      • 0 avatar
        derekson

        So just in time to face the brand new A4 and Jaguar XE. Perfect timing…

    • 0 avatar
      SP

      The Giulia (as currently described) won’t sell in big numbers. To verify that, just count how many 510-hp sedans are currently sold in the USA right now. And figure that Alfa will be slicing out a little upstart wedge of that already-small pie.

      Even if Alfa can net $5,000 per car, it will take years to recoup the investment.

      I like the Giulia, but my point is that it’s not a bread & butter car. It’s a halo car. It makes sense in the same way that the Viper made sense at the time – it’s rolling vehicular advertising. The payoff happens years down the road, when future ad campaigns for more practical vehicles can make misty-eyed references to the Giulia’s greatness.

      Even if the Giulia never shows up, it won’t really matter to FCA in general. Alfa isn’t needed in the US, and maybe not elsewhere either. It would be nice to have, but it’s not needed.

      • 0 avatar
        moff90

        Well, it’s not like the 510 hp Giulia is the only one that will be offered. At the next Frankfurt Motor Show they will show the ones normal people can actually buy.

      • 0 avatar
        MBella

        Mercedes sold over 40k of the outgoing 204 chassis based C63. If Alfa can take about a couple thousand of those away per year with the 510HP model, I think it will be a success. Remember. The profit margins on cars like these are very high. It will share many parts with the lower end models, and sell for a very high markup. It will also get people into the dealership, and then they can offer them the turbo-4 model that will lease for $299 per month.

  • avatar
    APaGttH

    Yes – it is certainly driving most of the growth.

  • avatar
    geozinger

    I have to say, that the latest couple of Jeeps that have hit the market have me interested. I can’t say that the attention FCA has given Jeep has been wasted and by the looks of it, it seems like it was well spent on the division.

    Like others noted, not all products are home runs and there are different cars for different needs. If a tree fell on my daily driver, I’m pretty sure I’d be looking at a Jeep product of some stripe. (or maybe an Abarth 500) It would just depend upon how much monthly pain I was willing to endure.

  • avatar
    VenomV12

    Neighbor today just came home with a new Overland Grand Cherokee in that gorgeous brown, up until yesterday he had a Mercedes ML, other neighbor last year got rid of his Land Rover LRwhateverthehell and got an Overland GC also and they are not the only ones. These are Indian, Arab and Pakistani doctors that never in my life I would ever have imagined would drive anything other than Honda/Acura, Toyota/Lexus, Mercedes or BMW. The success of Jeep infiltrating that part of the market is mind-blowing to me. It does not however seem to be translating to anything else they sell, those homes are still without 300s, Chargers, Challengers, 200s, etc etc. Jeep is some weird outlier that transcends other American cars.

    • 0 avatar
      Eyeflyistheeye

      The current Grand Cherokee is either one of the best cars Chrysler ever built, or the best car Chrysler ever built for the simple reason that for the third time in their life, Chrysler had to bet the future of the company on a single vehicle. In this case, a prototype of the current Grand Cherokee was used to convince the United States Government that Chrysler could build decent cars and deserved to be bailed out, and to show potential partners there was still value in Chrysler.

    • 0 avatar
      CoreyDL

      So many Indians in Hondas around here! They’re dominating that segment.

    • 0 avatar
      cnate

      lol, true, me, Chinese American,29, owned 3 Japanese sedans for the past 11 years, 2 Toyota, 1 Subaru.
      earlier this month, bought a black wrangler Sahara unlimited, been dreaming it for over a year, loving every minute of driving it.
      go jeep:)

  • avatar
    sportyaccordy

    This reeks of Piechism. Luca is probably laughing, sipping a bitter Campari on an Italian beach, thinking “buona fortuna gavone”

  • avatar
    yorkie

    Sergio Marchionne has turned Fiat into the 500 toy car company. He is entirely dependent on the 500 for sales in Europe. No investment to replace the Punto and Bravo which occupy the big selling B and C segments especially in Southern Europe, yet their sales have dwindled to an insignificant market share. In the first quarter of this year VW sold 33000 Polos, Fiat sold 7300 Puntos, the VW Golf sold 56000 the Bravo only 49! Not that long ago the Punto battled with the Golf for Number 1 spot in Europe. Lancia is on its’ death bed through dwindling sales, Alfa Romeo is going the same way and not even the Giulia will save it.

  • avatar
    Jeff S

    The answer to the question is yes Jeep is carrying FCA but then Ram is doing its part as well. Short term FCA needs the revenue from Jeep and Ram but long-term even they will not be enough to keep FCA solvent. I think FCA’s best bet is to merge or be acquired by another manufacturing which is what Sergio is trying to do. Lancia and Alfa are on their death beds with Sergio trying to revive Alfa with the Giulia which will probably not be enough. Fiat is not that strong either and Chrysler and Dodge are not carrying the load. Sergio is looking for a merger but it might take another downturn in auto sales to get anyone’s attention.

  • avatar
    derekson

    This isn’t quite on topic, but it is tangentially related and this seems to be the most recent/active FCA thread, so I have a question: Can anyone explain why the hell FCA is splitting their luxury segment strategy between Maserati and Alfa Romeo? It seems really bizarre that the nominal 5 and 7 series competitors are Maseratis but the 3 series competitor will be the Alfa Giulia. What possible advantage could this strategy have?

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