Jeep CEO lays out turnaround plan after sales plunge

Detroit- StrantisThe Jeep brand is known for its ability to handle rough terrain, but its latest challenge is to sell 1 million vehicles domestically by 2027, which will be a steep hill to climb.

Jeep, a coveted brand in the auto industry, has been suffering from sluggish sales in the United States, including five consecutive years of sales declines that could see it drop to sixth place by 2024.

Still, Jeep CEO Antonio Filosa believes the brand’s worst days are behind it and it’s still possible to hit its 1 million sales target. The company is executing a turnaround plan for the quintessentially American SUV brand, which he said has started paying dividends after U.S. sales fell 9% in the first six months of the year.

The plan includes lowering prices across its product line, including on high-volume models like the Jeep Compass and Grand Cherokee SUV; rolling out special offers such as incentives or 0% financing; and increasing marketing and advertising spending, Filosa said. It will also include upcoming roadshows with dealers to address additional questions and concerns.

Such behavior could eat into profits, but the brand’s average transaction price has soared from less than $40,000 in 2020 to more than $50,000 this year, according to Cox Automotive. Cox reports that average Jeep transaction prices have been higher than the industry average since 2021.

“The good news is that the actions we took in the first few months also resulted in important growth in the United States,” Filosa said in a virtual interview with CNBC on Monday.

Filosa’s comments came a day after the president of the Stellantis National Dealer Council wrote a scathing letter to Stellantis CEO Carlos Tavares over the company’s lost sales and other business decisions. Open letter.

Stellantis sold more than 1.5 million vehicles in the United States last year, down about 1% from 2022.

Filosa said Jeep reports sales on a quarterly basis, and U.S. sales increased last month: 28% from August 2023 and 55% from July. Jeep also reduced its inventory by about 25,000 vehicles during the period. But the brand still has a long way to go to achieve a significant shift in sales.

Jeep’s U.S. sales plummeted 34% from a record high of more than 973,000 SUV sales in 2018 to less than 643,000 last year. While most car brands saw sales grow last year, Jeep sales fell about 6%.

The latest decline comes after the company last year stopped making the entry-level Renegade and Cherokee compact SUVs, two mainstream models that had peak sales of about 300,000 units in the United States from 2016 to 2019.

“The loss of Jeep Cherokee … and Jeep Renegade is a significant blow to us,” Filosa said. “Our market coverage dropped from an average of 80% to 45%.”

Filosa said Jeep expects to regain market share “very quickly” and return to 80% market share coverage, which includes the segments in which Jeep competes, by the end of next year, when it launches an unnamed replacement for the Cherokee and New models.

In addition to discontinuing new models, brands such as Jeep owned by Stellantis also focused on profits rather than market share during Tavares’ tenure as CEO.

Tavares has been on a mission to cut costs since Fiat Chrysler merged with France’s PSA Group PSA in January 2021 to form the company. Double revenue to €300 billion ($32.5 billion) by 2030.

As part of the plan, Jeep aims to sell about 1.5 million SUVs globally by 2027, including 1 million in the U.S.

To achieve those goals, Tavares said earlier this year that he had relaxed policies on some pricing, incentives and other financial goals after talking to the company’s dealers.

Filosa said he would continue to work hard and meet with dealers on a turnaround plan. He will join Bob Broderdorf, the brand’s new head of North America, on a dealer roadshow starting next month.

Several new vehicles will also assist Jeep, America’s best-selling plug-in hybrid vehicle. The brand will launch the all-electric Wagoneer S later this year, a Jeep Wrangler-inspired “Recon” SUV next year, and extended-range plug-in versions of its larger Wagoneer and Grand Wagoneer SUVs.

Ahead of the launch of such vehicles, Jeep’s media spending increased 20% from the first half, according to the automaker.

“Now is the time to drive and accelerate sales recovery [they] needs to be done. Obviously next year we’ll be talking about all the growth because we have new products. …I believe [next year] It will be a completely different story,” Filosa said.

Jeep is also trying to improve the quality and reliability of its vehicles, which historically rank below average in third-party rankings. This includes delaying the launch of the upcoming Wagoneer S and Recon by four to six weeks, he said.

However, in the automotive industry, creating problem-free vehicles is easier said than done. Jeep confirmed on Monday it was working with U.S. auto safety regulators to investigate more than 781,000 new Jeep Wrangler and Gladiator SUVs after receiving reports of fires under the hood.

Filosa confirmed he was aware of the investigation but declined to provide further details. Tavares earlier this year highlighted quality issues within the automaker, specifically at a plant in suburban Detroit that builds the company’s Ram 1500.

“We are very carefully monitoring the quality evolution of the Jeep Wagoneer S and Jeep Recon in the factory,” Filosa said. “The only thing the factory asks of me is to deliver a car of perfect quality.”

The new all-electric SUV will be produced at Stellantis’ assembly plant in Toluca, Mexico. The company has not yet confirmed where the Cherokee SUV replacement will be produced, with the vehicle being built at a now-dormant factory in Illinois.