Jeep CEO implements recovery strategy following substantial sales drop

• The iconic American SUV brand, Jeep, is implementing a turnaround plan after five years of consecutive declines in the U.S. market.
• By 2027, Stellantis aims to sell approximately 1.5 million SUVs worldwide, with 1 million of those being sold in the U.S.
• In 2018, Jeep sold over 973,000 SUVs, but in 2019, its U.S. sales dropped by 34%, reaching less than 643,000 units.

The Jeep brand is renowned for conquering challenging terrains, but its goal of selling 1 million vehicles domestically by 2027 presents a formidable obstacle.

The Jeep brand, highly sought after in the automotive industry, has been experiencing a sales slump in the U.S. for the past five years, with 2024 on track to become the sixth consecutive year of declines.

Despite a 9% sales decline in the U.S. during the first six months of the year, Jeep CEO Antonio Filosa believes the brand's worst days are behind it and it's still possible to achieve the 1 million sales target. The company is executing a turnaround plan for the quintessential American SUV brand that he says is already beginning to pay dividends.

Filosa announced that the plan includes lowering pricing on high-volume models such as the Jeep Compass and Grand Cherokee SUVs, rolling out special offers such as incentives or 0% financing, increasing spending on marketing and advertising, and hosting an upcoming roadshow with dealers to address additional problems and concerns.

While actions that increase profits can be detrimental, Jeep's average transaction price has surpassed the industry average since 2021, according to Cox Automotive.

The positive outcome is that the measures we implemented in the past months are also contributing to significant growth in the U.S., as Filosa stated in a virtual interview with CNBC on Monday.

The chairman of the Stellantis National Dealer Council wrote a scathing open letter a day after Filosa made critical comments about Stellantis CEO Carlos Tavares regarding the company's sales losses and other business decisions.

In 2023, the U.S. saw a 13% increase in vehicle sales, while Stellantis sold 1.5 million vehicles, a 1% decline from the previous year.

Jeep sales

Jeep reported a 28% increase in U.S. sales from August 2023 and a 55% increase from July last month. Additionally, the brand reduced its vehicle inventory by approximately 25,000 units. However, Jeep still needs to make significant improvements in sales to achieve a notable turnaround.

Despite most auto brands experiencing growth in sales last year, Jeep's U.S. sales decreased by 6% from a peak of over 973,000 SUVs sold in 2018 to approximately 643,000 units in 2019.

The decline in sales occurred after the company stopped producing the Renegade and Cherokee compact SUV, which were both popular models with annual sales of around 300,000 units from 2016 to 2019.

""The decline in our market coverage from an average of 80% to 45% has been a significant hit to us, particularly with the loss of Jeep Cherokee and Jeep Renegade," Filosa stated."

Jeep aims to regain its 80% market share coverage by the end of next year, through the introduction of a new replacement for the Cherokee and electrified models, according to Filosa.

Looking forward

Under Tavares' leadership as CEO, Stellantis' brands, including Jeep, have prioritized profits over market share.

Since the merger between Fiat Chrysler and PSA Groupe in January 2021, Tavares has been focused on reducing costs as part of his "Dare Forward 2030" plan to increase profits and double revenue to 300 billion euros ($325 billion) by 2030.

By 2027, Jeep aims to sell approximately 1.5 million SUVs worldwide, with 1 million of those being sold in the U.S.

Tavares admitted to allowing leniency in pricing, incentives, and financial targets after consulting with the company's dealers earlier this year.

Filosa is continuing his efforts to improve the brand's performance by meeting with dealers and participating in a dealer roadshow with Bob Broderdorf, the new North American head, starting next month.

Several new vehicles will be launched by Jeep, which is the leading seller of plug-in hybrid electric vehicles in the U.S. The brand will release the all-electric Wagoneer S later this year, followed by a Jeep Wrangler-inspired "Recon" SUV and extended-range, plug-in versions of its large Wagoneer and Grand Wagoneer SUVs.

According to the automaker, Jeep has boosted its media spending by 20% in the second half of the year compared to the first half.

Filosa stated that it is now time to push and accelerate sales to recover as much as needed. Next year, we will focus on growth since we have new products. I believe next year will be a completely different story.

The Jeep brand is striving to enhance the quality and dependability of its vehicles, which have traditionally fallen short in third-party evaluations. According to him, this involves postponing the release of the Wagoneer S and Recon models by four to six weeks.

The automotive industry faces challenges in building problem-free vehicles, as seen in Jeep's recent cooperation with U.S. auto safety regulators on an investigation into over 781,000 newer Jeep Wrangler and Gladiator SUVs due to reports of underhood fires.

Tavares earlier this year pointed out quality issues at a suburban Detroit plant that produces the Ram 1500, but Filosa refused to provide further information about the probe.

"Filosa stated that the plants are closely monitoring the development of Jeep Wagoneer S and Jeep Recon quality in the factory, with the sole directive being to deliver the car when it meets the highest standards."

Stellantis' Toluca Assembly Plant in Mexico will produce the new all-electric SUVs, while the replacement to the Cherokee SUV, which was manufactured at a shuttered plant in Illinois, has not yet been confirmed as to its production location.